Mexico’s PE shortages worry buyers more than rising prices

27 September 2013 22:33  [Source: ICIS news]

HOUSTON (ICIS)--Polyethylene (PE) buyers in Mexico are more concerned with availability of plastic resins than price, a distributor said on Friday.

The comments illustrate the acute shortages of PE currently affecting Mexican buyers because of the maintenance stops for ethylene and PE domestic plants.

PE supply has been vastly reduced by programmed maintenance at Mexico’s Cangrejera cracker and maintenance on other domestic polyethylene (PE) plants.

The shortages are more acute for linear low density polyethylene (LLDPE), although some high density polyethylene (HDPE) grades are also scarce.

The situation has been compounded by turnaround in the US, the main supplier of PE imports in Mexico.

Demand has also been softer than expected, and this was attributed to two factors.

One was a teachers’ strike that is having an impact on consumption of plastic products.

Secondly, nearly 26 states have been affected by the storms that moved through Mexico from the Atlantic and the Pacific coasts in early September, the source said.

The rains that continue to fall could also delay the return of the plants currently undergoing maintenance.

The Mexican PE plants are scheduled to return by mid-October, but 8-10 more days may elapse until material is available throughout the supply chain, the source said.

Pemex implemented strong price increases for all grades, effective 5 September, with hikes ranging from 7.5% to 8.5% depending on grade.

Import prices have gone up by 2 cents/lb for some players, instead of the 5 cents/lb initially sought by sellers, buy-side sources said.

Pemex is the only PE domestic producer in Mexico. The Braskem-Idesa joint venture for the Ethylene XXI project is scheduled to start PE production in late 2015.

By: George Martin
+1 713 525 2653

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