APLA ‘08: Plastic resin prices fall in Argentina

16 November 2008 19:08  [Source: ICIS news]

RIO DE JANEIRO (ICIS news)--Fifteen-percent import tariffs have insulated Argentina during September and October, but plastic resin prices are poised to fall in the remainder of the year, producers and distributors said on Sunday.

Initially, the low priced competition was coming only from Asia, and this was not a major problem in Argentina, which usually receive maritime shipments on the Atlantic coast, sources said at the 28th Latin American Petrochemical Meeting (APLA).

But as December approaches, offers from the US Gulf are getting more aggressive as suppliers strive to unload inventories before the end of the year to minimise the tax bite.

In addition, product from Mercosur trading partner Brazil is also starting to sell at competitive prices in the region and this is driving prices down.

Until October, plastic resin prices had fallen in Argentina mostly due to currency fluctuations, but now prices are also falling to compete with cheaper alternatives.

The financial crisis has not been much of a factor in Argentina because credit has always been tight there since the large economic collapse of 2001, a distributor said, but noted that demand has vanished with the quickly adopted hand-to-mouth buying pattern from transformers that expect lower prices ahead.

“Buyers who used to order one full truck are now ordering a couple of palates or so,” Federico Zubieta of Alta Plástica said. “The pressure on prices is more noticeable on polypropylene (PP) linear low density PE [LDPE] and high density PE [HDPE].”

A manager with Petroquímica Cuyo, one of two PP producers in Argentina, agreed that PP prices are under pressure. Although local prices have declined slightly, a big drop is being forced on export prices to regional buyers like Chile or Brazil, he said.

International traders are also an important competitor these days, offering delivered homopolymers in South America at about $1,000/tonne (€790/tonne) cost and freight (CFR), the producer said.

Asked if some deals were expected to close at APLA, the producer said “we came prepared, but usually no deals happen at the APLA meeting; we just get valuable new contacts and market intelligence”.

($1 = €0.79)

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By: George Martin
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