Vietnam's retail, import PP, PE gap narrows despite weak demand

16 February 2011 07:20  [Source: ICIS news]

SINGAPORE (ICIS)--Vietnam is seeing a smaller gap in the retail and import prices of polyethylene (PE) and polypropylene (PP) despite weak domestic demand, as local traders have raised domestic prices to be in line with higher import costs, industry sources said on Wednesday.

Domestic retail prices have risen by around dong (D) 900-1,000/kg ($0.04-0.05/kg) this week, local traders said.

The gap between retail and import prices was reduced to $30-50/tonne (€22-37/tonne) following the local price increases, they said. The difference between retail and import prices previously was $80/tonne, they added.

Film grade linear low density PE (LLDPE) and PP yarn grades are selling at around D34,200/kg and D38,000/kg on a DEL (delivered) basis this week, which yield import parities of $1,430/tonne CFR (cost & freight) Vietnam and $1,600/tonne CFR Vietnam. These are $30-50/tonne lower than the import prices offered in the market, they said.

Asian and Middle East LLDPE film and PP yarn grades are being offered at around $1,480/tonne CFR Vietnam and $1,630/tonne CFR Vietnam for prompt shipment, they said.

LLDPE film and PP yarn grades were traded at around D33,300/kg and D37,000/kg on a DEL basis respectively, in the domestic retail market last week, which yielded import parities of $1,400/tonne and $1,550/tonne on a CFR Vietnam basis, they added.

Local traders said import material was still expensive despite the smaller import-retail price gap because their buying power was significantly weakened after the dong depreciated against the US dollar last week.

The official dong to US dollar exchange rate was revised to D20,920 to US$1 last week, from the previous rate of D19,500 to US$1.

It has been difficult to obtain US currency from the local banks because the government has been restricting the inflow of the currency as part of its efforts to cap its trade deficits, local resin traders said.

Importers in Vietnam often resort to buying US currency in the black market, but the exchange rate offered by the illegal channels has also been increased to around D21,700 to US$1, from the previous level of D21,300, the resin traders added.

($1 = €0.74 / $1 = D20,920)

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By: Chow Bee Lin
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