Will Africa’s PP, PE markets extend gains into 4th month during April?

In Africa, supply restrictions from major mainstream suppliers brought additional hikes for March across the continent. Despite lackluster demand in most parts of the region, March marked the third month of firmer prices,with restrained availability and shipping hiccups taking center stage. PP and PE prices in most parts of the region have neared their highest levels of the past two years while the sustainability of this uprun is seen highly debatable in April.

In Nigeria, import PE near 1-year high, PP at almost 2-year peak

In Nigeria, the largest African market, PP and PE offers from a major Saudi producer indicated increases of $20-50/ton and $10-40/ton respectively over the latest February levels. According to players, offers are negotiable for firm bids as the market lacks real demand boosters.

Along with this month’s price hikes, import PP prices hit their almost two-year highs while import PE prices saw their highest of the past one year, ChemOrbis Price Index suggests.

ELEME trims offers for 6th month running

Meanwhile, the country’s local producer, ELEME, continued to defy the bullish track in the import market for the third month. Indeed, the producer’s March PP and PE offers signaled decreases for the sixth consecutive price announcement.

According to market sources, the recent declines were attributed to improved NGN/USD rates in the parallel market amidst CBN’s (Central Bank of Nigeria) sustained FX intervention. Generally, PP offers were assessed NGN24,900-25,000/ton ($16/ton) lower compared to the latest February levels, whereas PE offers were NGN25,000-40,000/ton ($16-26/ton) lower on a monthly comparison.

Dangote Refinery starts test runs at new PP plant

Nigeria’s Dangote Refinery has started test runs at its 320,000 tons/year unit as of March. “The producer initiated PPH raffia and BOPP grades and will follow with the PPH inj., PPBC inj., and PPRC inj. grades,” stated a local source, adding that the producer is expected to start commercial production by June or July. It’s noteworthy that the refinery houses a second PP plant with a 550,000 tons/year capacity, the start-up timeline of which has not been shared yet.

Once fully operational, the Dangote facility is set to become Africa’s largest polypropylene production site and will likely grab shares from Indorama Eleme, the first local producer in Nigeria, and imports from the Middle East.

Kenya PP, PE markets stand close to 2-year highs

Over East Africa, March PP offers in Kenya were $10-20/ton higher when compared to the latest February deals. Also, PE prices displayed slight gains when compared to February deals.

Players expressed concerns about ongoing challenges amidst weak downstream segments which were dampened further by the Ramadan lull. “Lower done deals could be achievable amidst stumbling end business demand,” a distributor remarked. ChemOrbis Price Wizard suggests that the import market continues to stand at its highest level since May 2023.

North Africa PP markets also approach 2-year peak

In North Africa, sellers’ attempts to keep the markets on the firm side proved workable this month too despite weak demand fundamentals, as restrained supplies from major mainstream suppliers in the Middle East continued to lift prices. Morocco saw higher prices while Tunisia and Algeria remained stable. Accordingly, ChemOrbis Price Index for North Africa PP markets suggests the highest levels seen since May 2023, while PE prices have not been able to overreach the September 2024 peak.

In Morocco, players reported new March PP and PE offers with up to €60/ton ($65/ton) increases when compared to initial February offers. According to players, restricted supplies and logistics hurdles continue to push prices higher despite buyers’ resistance.

In Tunisia, new March PP and PE offers surfaced again mostly with rollovers compared to the latest February levels, apart from slight $20/ton increases reported for the HDPE film grade. Although euro-based offers were stable, the rising euro against the US dollar resulted in higher levels.

Similarly, players in Algeria received March PE offers mostly flat form February. Despite stable prices, players noted that they are expecting lower deals as the market is being pressured by poor trading activity amidst the Ramadan lethargy.

April outlook is shaky

Looking ahead, players across the continent are highly concerned about the sustainability of the firming trajectory across April amidst a slew of bearish factors including below average demand across the continent, fading cost support and having most major Saudi suppliers finished their planned turnarounds in Q1. “Also, prolonged Eid al-Fitr holidays might overshadow sellers’ hike targets and the market may see some weakening,” a regional player remarked.