Nigeria becomes Africa’s weakest PE, PP market on limited foreign currency
Ben Lake
22-Nov-2018
LONDON (ICIS)–Multiple west African polyethylene (PE) and polypropylene (PP) markets are struggling with a lack of foreign currency, and Nigeria has turned out to be the most affected.
Polymers demand
could be healthier in these markets, sources
said, but buyers are not being able to provide
payments, with many now owing back payments on
previous orders.
Nigeria is suffering from high stock levels, as well as low buying appetite.
“Nigeria is a catastrophe,” said a trader.
“For many people, it is the worst for many years.”
The situation will improve for Ghana and Ivory Coast following the sale of their cocoa harvests in December, which bring in large quantities of foreign currency.
The government for these countries set a price paid to farmers for cocoa crops, measured by weight.
Cocoa prices fell sharply last year, leading to a cut in price on fears of a supply glut, potentially exacerbating current currency issues.
A climb in global cocoa prices this year has resulted in an increase in Ivory Coast’s prices, although Ghana has kept its prices flat. The latter’s prices were already higher than Ivory Coast’s.
However, Nigeria’s cocoa harvest represents a much smaller part of its economic output, and the country will therefore lack the same sudden influx of foreign currency.
Polymers players have said this could mean the foreign currency crisis could continue into 2019.
—
Global sentiment is poor, and falling crude prices are underlying a lack of buying interest.
Polymers prices are softening globally, affecting the current outlook in Africa as the region is dependent on imports.
Weakness is likely to continue into December, with many suppliers attempting to de-stock before the Christmas holiday period.
Demand is expected to drop off in the second half of December as a result.
Although some players keep predicting a floor to price drops, this has been repeatedly passed, and several sources said they expect further weakening.
However, some players said they are optimistic demand could pick up in 2019 across the region.
—
PE is the most widely used plastic in the
world, primarily found in packaging including
plastic bags, plastic films and geomembranes.
PP is used for packaging, ropes, carpets, plastic parts, loudspeakers and automotive parts.
Pictured: Men testing sacks of cocoa
for humidity in Ivory Coast; Africa’s polymers
players are hopeful the cocoa harvest will
bring in much-needed foreign
currency
Source: Eye
Ubiquitous/REX/Shutterstock
Focus article by Ben Lake
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of industry experts to deliver a comprehensive market view based on independent and reliable data, insight and analytics.
Contact us to learn how we can support you as you transact today and plan for tomorrow.
READ MORE
![](https://cjp-rbi-icis.s3.eu-west-1.amazonaws.com/wp-content/uploads/sites/7/2024/01/16170556/ContactUs_Services.jpg)