Brazil’s Oct price hike for polymers still in doubt

11 October 2011 23:13  [Source: ICIS news]

HOUSTON (ICIS)--The partial recovery of the Brazilian real versus the US dollar is diminishing support for polymer price increases announced earlier in the month, market sources said on Tuesday.

The proposals followed a sharp and sudden increase of the US dollar versus the real (R).

Local producer Braskem announced intentions to increase the price of all grades of polyethylene (PE) in October by R570/tonne ($326/tonne, €238/tonne).

Braskem is also increasing in October the price of all grades of polypropylene (PP) by R400/tonne.

Polystyrene (PS) producers Innova and Unigel announced price increases of at least R300/tonne in October.

However, the announcements were made when the US dollar had skyrocketed to more than R1.90, stabilising later around R1.86 after government intervention.

But the dollar has sunk in the past few days to values around R1.75-1.77. This value is still high compared with R1.63in the first part of September.

In addition, the large October increase for Brazilian polymers has coincided with a price decline of basic feedstocks ethylene, propylene and benzene in international benchmark markets.

The question these days is how much of the initial October increase will be implemented, considering that the dollar value is still a moving target and demand is soft.

Buyer sources in Brazil said buyers have accumulated stock ahead of the October increase and only those that absolutely needed to replenish stocks have bought in October at the new prices. But even those purchases were at minimal quantities.

The answer may become clear next week, which is typically the key week of the month for sales, a distributor said.

Large buyers in Brazil usually make their purchases in the second half of the month, local sources said.

($1 = €0.73)
($1 = R1.75)

For more on polymers visit ICIS chemical intelligence

By: George Martin
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