24 April 2013 23:23 [Source: ICIS news]
HOUSTON (ICIS)--Mexico’s sole polyethylene (PE) producer Pemex reduced the price of most grades of PE by up to 4.5%, effective on Wednesday, with high-density PE (HDPE) falling by 7.5%, distribution sources said.
PE markets have had soft demand this month on buyer expectations of lower prices. Imported material has also been discounted on the US border, putting further pressure on domestic production.
Pemex has had another major disadvantage with the strengthening of the local currency relative to the US dollar, which has made imports more competitive.
PE prices had a 5% reduction in March, but the measure did not result in significant demand increases.
It remains to be seen whether this price reduction will be the right medicine to revive demand.
Import prices have not posted any declines yet, but with lower prices at the US border, reductions may be visible at the distributor level in the short term.
The Pemex reduction will add pressure for importers to make a similar move.
Prior to this April reduction, Mexico’s domestic LDPE prices were at $1,554-1,668/tonne (€1,197-1,284/tonne) FOT (free on truck), while LLDPE prices were in the range of $1,411-1,668/tonne. HDPE blow moulding prices were at $1,496-1,582/tonne FOT, according to ICIS data.
Pemex is the only producer of PE products in Mexico. The Braskem-Idesa joint venture (JV) is expected to start production at the end of 2015.
($1 = €0.77)
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