Argentina PE transformers squeezed by price freeze

20 February 2013 22:37  [Source: ICIS news]

HOUSTON (ICIS)--Argentina’s polyethylene (PE) transformers feel squeezed by higher feedstock costs, while a price freeze at retail levels makes higher prices more difficult to transfer to the end user, market participants said on Wednesday.

The local producer has successfully implemented a $100/tonne (€75/tonne) price increase for all grades of PE in February, but transformers are having a hard time passing the hikes along to their customers, sources said.

A 60-day price freeze agreement between state officials and supermarkets is creating resistance for transformers, particularly for those who cater to the food sector, a source said.

Market demand is perceived as mixed, as the local producer has increased prices without much pushback from distributors or plastic processors, but transformers are squeezed in the middle.

February demand is seen as strong, considering that in addition to being a short month, February has had a good many holidays.

Production is seen as normal, with good supply of natural gas to the petrochemical industry, but some market participants fear natural gas supply could tighten in March, with consequences for downstream markets.

Brazilian imports are covering shortages of some grades in Argentina. Supply is tighter for high-density polyethylene (HDPE) for film and blow moulding applications.

Availability of low-density polyethylene (LDPE) and linear low-density polyethylene (LLDPE) is seen as adequate.

In the current conditions, further February price increases are unlikely to succeed in Argentina, and March increase initiatives – already talked by the local producer – could be derailed by lower feedstock prices in benchmark US markets.

February PE prices in Argentina are currently in the range of $2,194-2,390/tonne for LDPE, at $1,998-2,305/tonne for LLDPE and at $1,998-2,293/tonne for HDPE blow moulding material, based on ICIS data.

($1 = €0.75)

By: George Martin
+1 713 525 2653

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