29 August 2012 06:07 [Source: ICIS news]
By Ong Sheau Ling
SINGAPORE (ICIS)--Spot polypropylene (PP) raffia prices in Pakistan hit a three-month high at above $1,400/tonne (€1,120/tonne), and may continue to strengthen in September as buyers replenish their inventory, market players said on Wednesday.
Current offers for September shipments are $20-60/tonne higher than last week's ICIS-assessed price for PP raffia at $1,390/tonne CFR Karachi.
Offers from the Middle East were at $1,420-1,450/tonne CFR (cost and freight) ?xml:namespace>
An Indian major quoted $1,440/tonne CFR Karachi, LC 30 days, while another Indian producer offered $1,440/tonne
“The prices in the domestic market here is already close to $1,400/tonne CFR Karachi, since everyone is drying up [on stocks],” a Karachi-based trader said.
Demand for PP raffia after the Eid holidays should turn robust, particularly for the production of woven sacks for agriculture harvest, according to traders in
An influx of smuggled Iranian woven sacks across the Pakistan-Iran border has curbed the appetite of raffia converters in the first half of the year, but this was recently minimised by tighter rules implemented by the Pakistani government, market sources said.
“Confidence is returning in the processing sector here, with run rates of converting units increasing by 20-30% to 70-80%, as compared to pre-Eid levels,” a trader and converter based in Karachi said.
“Prices will go up. [There is] no reason that prices should soften further,” another Karachi-based trader said.
Spot PP prices had been hovering in the $1,300/tonne CFR Karachi levels over the past three months, after a price slump in early May. Bearish sentiment had prevented the build-up of inventories, and Pakistani importers were only buying on a need-to basis between May and August, market sources said.
Some Middle East and Indian producers cited strengthening raw material costs for quoting higher offers for PP raffia to
PP producers are also pushing for higher prices to prevent further margin erosion, industry sources said.
On 24 August, stand-alone margins of northeast Asian PP producers were at negative levels of $151/tonne, while integrated naphtha PP makers were at negative levels of $159/tonne, according to ICIS.
“We know that the prices of propylene and PP have once again come on par, which is not sustainable for PP makers,” a converter based in
($1 = €0.80)
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