07 March 2013 20:41 [Source: ICIS news]
By George Martin
HOUSTON (ICIS)--Estizulia, Venezuela’s sole polystyrene (PS) producer, increased prices for all grades of PS by nearly 50% effective 1 March, a company source said on Thursday.
The increase has two major ingredients: One is the currency devaluation from bolivar (Bs) 4.30 to Bs6.30 per US dollar. The second factor has been increased feedstock costs.
Estizulia cannot purchase raw materials in the international market on its own.
The company has an agreement with Pequiven, the state petrochemical company, which can import resins without having to go through CADIVI, the entity that controls allocation of dollars for imports.
Dealing with Pequiven avoids the typical CADIVI delays, but Estizulia pays more for its feedstocks, namely styrene and butadiene rubber (BR), the latter used for production of high impact polystyrene (HIPS).
With the increase, general purpose polystyrene (GPPS) goes up to about Bs24,000/tonne ($3,810/tonne, €2,934/tonne) FOT (free on truck), while HIPS goes up to Bs26,250/tonne ($4,167/tonne) FOT – easily the highest PS prices on the planet.
Local buyers are absorbing the increase without much protest because they lack viable alternatives. However, it remains to be seen if they will be able to transfer the higher costs to their customers.
The government keeps a watchful eye on food prices, and much of the PS production goes to that sector. It remains to be seen if the food packaging increases will be allowed.
The outlook in Venezuela is uncertain, because after the death of President Hugo Chavez, elections must be called within 30 days to select a new president.
This coming Friday has been called a key date by locals, when the president’s funeral will take place. But the uncertainty will continue much longer.
Prices are increasing for all items as people stock up, fearing potential shortages of essential items – something that has been going on for some time in Venezuela for items such as cooking oil.
Sales of alcoholic beverages have been prohibited, effective 6 March, until next Tuesday 12 March in an effort to avert potential conflicts.
The death of Chavez leaves behind a widely divided nation and many questions unanswered.
($1 = €0.77; $1 = Bs6.30)
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