West African PP copolymer premium narrows to $5/mt amid Asian demand

The polypropylene copolymer premium over homopolymer diminished across West African markets as suppliers redirected materials to Asia and prioritized copolymer production over homopolymer grades, a Middle East-based producer said Oct. 8.

Platts, part of S&P Global Energy, assessed CFR West Africa polypropylene raffia at $1,440/metric ton on Oct. 7, while CFR West Africa polypropylene copolymer was assessed at $1,445/mt, narrowing the spread between the two grades to $5/mt.

In the week to Sept. 30, Platts assessed the CFR West Africa polypropylene raffia spot price at $1,310/metric ton Sept. 30, while the CFR West Africa PP copolymer spot price was assessed at $1,390/mt. The spread between the two grades was at $80/mt.

Supply constraints

Supply remained the main driver. Producers directed volumes to India, Pakistan and Southeast Asia, where netbacks were stronger, reducing allocations to Africa and making homopolymer the hardest grade to source.

Demand in India strengthened as limited feedstock availability constrained domestic production, prompting buyers to seek material elsewhere. With deliveries to Africa facing logistical bottlenecks, producers and traders could secure better netbacks by diverting cargoes to the Indian subcontinent, market participants said.

Cargoes from China and other Far Eastern markets were also absent in the African markets. Distributors maintained low homopolymer inventories and had little prospect of replenishment.

Grade availability

Copolymer supply was more comfortable, particularly in West Africa, limiting further price gains. The spread between the two grades was reportedly the narrowest in West Africa, as another Middle Eastern producer heard deals for homopolymer and copolymer being done at parity.

The Middle Eastern producer said it prioritized copolymer production over homopolymer because copolymer offered better margins. However, the producer acknowledged that the spread between the two grades was narrowing.

Buying behaviour

North African buyers continued to work through inventories built before the summer slowdown, with normal buying expected to resume around mid-October. Inquiries from both North and West Africa had increased compared with recent weeks.