Southern Africa spot prices for imported polymers up $50-100/tonne

Spot prices in the southern Africa polymers markets climbed by $50-100/tonne (€37-73/tonne) for February business, as importers raised their offers on stronger sentiment and high feedstock costs, sources said on Wednesday.

The strongest increases overall were seen in the globally short polypropylene (PP) market, although low density polyethylene (LDPE), the tightest of the three polyethylene (PE) grades, also came under strong upward pressure on limited supply.

Homopolymer PP prices rose by $70-100/tonne to reach $1,500-1,600/tonne CFR (cost and freight) southern Africa, according to ICIS, while the even shorter availability of copolymer PP forced values up by $100/tonne, leaving the range at $1,650-1,700/tonne CFR southern Africa.

There was a general expectation that import prices of both PE and PP would continue to climb throughout February, as South African producers which were offering aggressive prices into the region had announced their intention to raise their competitive prices in the coming month, market sources said. 

Although this gave importers more flexibility in their approach to pricing, it still remained extremely difficult for suppliers of foreign material to be competitive, traders on the ground said.

This was particularly apparent in the PP market, in which local manufacturers have a cost advantage based on their feedstock and ample product to cover the majority of demand both in southern Africa and South Africa.

“I have not been able to sell PP into South Africa for months, and it's becoming harder in certain regions of southern Africa in the last seven to eight months,” a South African distributor of Saudi Arabian PP said.

Local South African free delivered (FD) homopolymer PP prices remained steady at rand (R) 10,300-11,000/tonne ($1,459-1,558/tonne), while copolymer PP was higher at R11,000-11,800/tonne FD.

A number of sources said that product available towards the lower end of the two ranges would begin to disappear as January drew to a close, but was currently still available at this level.

Traders also expressed concerns that the PP import market in South Africa could dry up completely, as it was increasingly the case that less material was making its way into the region.

“We get the occasional offers from Latin America or Saudi Arabia for South Africa, but they are usually not workable. Increasingly, these offers are becoming less regular. It's almost like South Africa is a last resort for suppliers,” a trader said.

There was some anxiety that the competitive approach to pricing displayed by South African producers was extending to the PE market, and local traders said that increases of $50-100/tonne in the import market would create a wide spread between local and import offers.

“The total increase in February might be a bit heavy and we could lose some volume. Overall we expect it to go through, but it will be tough,” said one trader.

However, there was some relief for suppliers of PE, as both southern Africa and South Africa rely more heavily on imports of PE due to a lower level of local supply.

($1 = €0.73, $1 = R7.06)