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Will Africa’s PE markets remain soft in September?

  • 25/08/2017 (03:56)
The PE markets of Africa and Egypt are ending August on a soft note with activity slowing further as some parts of the region are readying to enter Eid al-Adha holiday next week. Weak economic conditions, liquidity issues and unstable local currencies kept demand from converters hesitant and forced sellers to trim their initial import PE prices down as the month wore on.

Early expectations for the post-holiday period suggest that a mostly stable trend will remain in place with possible softening in deals across the region. “PE suppliers conceded to some discounts for August in order to speed up their unsatisfactory sales. Buyers are anticipating the current trend to remain valid next month,” players commented.

However, whether overseas suppliers will consent to stable to soft prices for another month in Africa is a question mark, according to some. In the light of the global upturn in PE prices as well as the firming ethylene prices, producers will be justified to seek hikes, they argue, regardless of the regional factors. They may easily shift their allocations to other regions, where they can obtain better netbacks, they say.

In Egypt, cash flow issues are hampering overall activity amidst comfortable supplies, according to a film converter. A trader confirmed as well, saying, “Manufacturers are mostly sidelined citing their slack end product business and problematic liquidity. Following discounts from Mid-Eastern sources, no noteworthy changes are probable in PE prices over the near term amidst the holiday lull that already kicked off.”

A South-Africa based trader lamented that the volatile parity remained as an obstacle for smooth import activities across the region while high stock levels also weighed on sellers. “The region was indifferent to the upwards momentum in Asian PE markets,” he remarked.

In Algeria, PE buyers obtained discounts ranging from $20/ton to $60/ton from their suppliers of import PE cargos after negotiations. “Tough economic conditions have caused manufacturers to refrain from purchasing large volumes in the recent weeks,” a player noted.

Buyers in Nigeria achieved lower import PE deals with a major Saudi producer as the supplier gave discounts of up to $20-40/ton from its initial August announcements. “The fluctuating parity continues to hinder sales activity in the import market since the local market provides a more competitive option owing to the depreciation of the naira against the American dollar,” stated a player.
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