August PP prices rise $35-50/tonne in Argentina on tight supply

04 August 2011 18:47  [Source: ICIS news]

HOUSTON (ICIS)--August polypropylene (PP) prices are going up in Argentina, where supply is tight, but not by much, market sources said on Thursday.

Buyers expecting an August price rollover were surprised by the increase.

The increase is in the range of $35-50/tonne (€25-35/tonne) for all grades of PP, but implemented only by Petroquimica Cuyo, one of two producers in the country.

Prior to the August increase, PP prices for homopolymers were in the range of $1,932-2,053/tonne, and slightly higher for copolymers and random material.

Petroken, the remaining PP producer, manufactures only homopolymers.

Buyers continued to experience delays in the delivery of copolymers because of shortages of ethylene in the country.

Imports from Brazil have historically been the alternative to supply the volumes domestic producers in Argentina fail to produce.

But this source is constrained by the Department of Commerce in Argentina, which insists that all domestic sources must be tapped first, before they grant licences to import material.

Buyers must prove that domestic producers are not delivering orders in order to get import licences.

The result is that buyers are forced to slow down or stop their production plants for lack of raw materials while the cumbersome licensing process takes place, a transformer said.

However, the procedure becomes a tool that allows buyers to pressure suppliers into compliance.

Resellers of Brazilian PP said the number of granted import licences had increased of late as a result of the domestic production shortages, but not fast enough.

($1 = €0.70)

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By: George Martin
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