NewsFlashUS-Asia PP arbitrage opens

14 July 2006 08:47  [Source: ICIS news]

SINGAPORE (ICIS news)--The US to Asia arbitrage for polypropylene (PP) opened this week, with over 2,000 tonnes of the yarn grade sold at $1,250-1,260/tonne CFR China for shipment from end-July to mid August, traders said on Friday. 

Low spot propylene prices and weak PP demand in the US, coupled with high CFR prices in Asia, created the perfect opportunity for US material to move into Asia, said producers.

US spot propylene prices were assessed at 44.25-46.00 cts/lb for the week ended 7 July, according to global chemical market intelligence service ICIS pricing.

A few Asian traders said they had received more offers of US PP yarn grade at $1,270-1,280/tonne CFR China for July or August shipment. This was up to $30/tonne lower than offers of Asian and Middle East material, but it was not immediately clear if the quantity was enough to push Asian prices down.

Asian PP prices fell dramatically in the second and third quarter of 2005, when large quantities of US material were offered to China and Southeast Asia at lower prices.

Producers in Asia and the Middle East have not announced August offers for China and Southeast Asia, but they were conscious of the possible adverse impact of US exports on regional PP prices.

Some Asian producers need to raise prices for August due to high crude and propylene prices, and could cut production if their attempts to raise prices were thwarted by an influx of lower-priced US material, an Asian producer said.

By: Chow Bee Lin
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly