FocusAsia to supply more PE/PP to S America on open arbitrage window
11 February 2011 10:31 [Source: ICIS news]
By Chow Bee Lin
?xml:namespace>SINGAPORE (ICIS)--Asian sellers of polypropylene (PP) and polyethylene (PE) may be prompted to supply more to South America, given an open window for arbitrage trades following sharp spikes in US prices of the material, industry sources said on Friday.
The US is a key exporter of the polymers to South America. But Asian PE and PP recently became more competitive in that market as US PP/PE prices spiked amid weather-related supply disruptions, the sources said.
Meanwhile, polyolefin supply within South America was expected to tighten after last week’s power outage in Brazil - a key production base in the region, said a Korean PP producer.
At least 2,500 tonnes of homopolymer and block copolymer PP was sold at $1,670-1,680/tonne (€1,236-1,243/tonne) FOB (free on board) Korea and $1,710/tonne FOB Korea, respectively, for prompt shipment to the west coast of South America, the producer said.
Around 1,000 tonnes of film grade Middle East high-density PE (HDPE) was sold this week at $1,360/tonne FOB (free on board) for prompt re-export to South America, Chinese traders said.
A few thousand tonnes of Middle East linear low-density PE (LLDPE), meanwhile, was sold at $1,440/tonne FOB China for re-export to the same region, they said.
Negotiations for Indian PP yarn grade for re-export to South America were underway, with the offer cited at $1,570/tonne FOB China, they added.
Freight to South America was estimated at $90-100/tonne from South Korea and China, Asian traders said.
China had been re-exporting polymers possibly due to weak domestic demand, local traders said.
Buying activity in China had slowed down significantly prior to the week-long Lunar New Year from 2 February, and business had still not regained momentum this week with many plastics end-users still away on holiday, they said.
But re-export volumes from China to South America were expected to be limited, since supply within Asia could tighten from now until May amid a slew of plant maintenance shutdowns in northeast Asia and the Middle East, the traders added.
($1 = €0.74)
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