Price and market trends: Latin American polymers growth to rise in 2013

22 November 2012 20:25  [Source: ICB]

Brazil-based Braskem is expecting polyvinyl chloride (PVC) demand in Brazil to grow by 6% in 2013 after experiencing 3% growth in 2012, a company source said.

Water bottles Rex Features

 Rex Features

Peak season for bottled drinks is pushing up Brazil's PET demand

Domestic PVC prices in Brazil rolled over for November from October, the source said on the sidelines of the Latin American Petrochemical Association (APLA) annual meeting.

A decision for December has not been made. However, December pricing in Brazil is expected to follow direction from projected weakening in Asian PVC markets.

Pipe-grade PVC prices in Brazil are assessed at $1,600-1,790/tonne DEL (delivered).

PVC production is normal in Brazil. A blackout that caused Braskem to briefly stop PVC production about three weeks prior to the APLA conference on 10-13 November had no major effect on resin supplies, the source said.

Feedstock vinyl chloride monomer (VCM) is also being produced normally and on-spec at the new Braskem plant that began production this year, the source said.

Braskem also expects 2013 polyolefins demand to increase over 2012 because of government incentives as well as higher consumer and industrial demand.

Overall, Brazilian polypropylene (PP) and polyethylene (PE) demand should each grow by 4-5% in 2013, said Luciano Guidolin, executive vice president for polyolefins and renewables for Braskem. That compares with expected growth rates of 1% for PE demand and 3% for PP, he added.

Braskem expects higher demand because the Brazilian economy is expected to expand at a faster rate in 2013 − by 4% in 2013 versus 1.5% in 2012. It expects polyolefins demand to increase in the nation's automobile, consumer goods and durable goods sectors, Guidolin said.

The Brazilian government is also taking steps to reduce taxes on labour, to eliminate import incentives and to reduce energy costs. Moreover, for more than a year, the Brazilian government has introduced several stimulus measures. For example, Brazil has lowered interest rates from 12.50% in July 2011 to a record low of 7.25%, noted Guidolin. Longer term, the nation should benefit from a logistics infrastructure programme that should improve the country's highways and railroads, said Guidolin.

BRAZIL PET STABLE

Polyethylene terephthalate (PET) prices in Brazil are expected to remain stable through the end of 2012 on support from a balanced domestic market and steadier Asian prices in November, an industry participant said.

PET prices in Brazil firmed in recent months, but the current trend is driven by ample resin inventories in the country and recent shipments from Asia, the source said.

Additionally contributing to a steady Brazilian market, the threat of cheap PET pre-form imports from Uruguay and Paraguay is discouraging the local PET producer from proposing any price increases for November and December, the source said.

No duty and no anti-dumping taxes are applied in Brazil on PET pre-forms imported from Uruguay and Paraguay, according to the source.

PET demand in Brazil is rising on seasonality, in line with the hot weather and the peak season for bottled drinks, the source added.

MEXICO PP HIKED

In Mexico, the country's sole PP producer Indelpro increased prices for all grades by 4 cents/lb in November, a company source said.

Brazil PVCAlthough there has been no settlement of the propylene contracts in the US Gulf, the benchmark for the region, nominations have been heard at plus 5 cents/lb ($110/tonne, €87/tonne) and plus 7 cents/lb. Market participants envisage that propylene contracts may settle at slightly lower levels.

Demand for PP has picked up in Mexico with recent stability in feedstock prices. In addition, demand from Central America remains strong, with fewer offers of Asian product, the source said.

Indelpro envisages steady activity for the coming months and continuous growth in 2013, company executives said. They cited continued growth of the automotive sector in Mexico and a relatively strong economic outlook as some of the reasons for their optimism.

The Mexican PP market is growing at an annual rate of 3-4% and more of the same is expected for the coming year.

Indelpro secures feedstocks locally and complements its raw materials mix with spot purchases of propylene of diverse origins.

VENEZUELA PE FLAT

PE resins prices in Venezuela are likely to remain stable for the rest of the year, Maria Odete Soarez, marketing manager with Venezuelan producer Polinter, said at the APLA annual meeting.

Venezuelan prices have hardly changed this year. Domestic prices remain at levels below international prices, but all imports bought to complement local production are more expensive.

Venezuela's LDPE prices are at $1,416-2,756/tonne (€1,119-2,177/tonne), according to ICIS data. Other grades are much cheaper.


Author: Ron Coifman, George Martin and Al Greenwood



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