South American PP prices drop on pressure from US, Asian offers

:: 14 May  2010 ::

Polypropylene prices into Latin America moved $150-$250/mt lower this
week on pressure from lower offers from the US and India, source said
Thursday. 

     Exports from India into the West Coast of Latin America have fallen
roughly $150/mt in the last week as Reliance confirmed selling polypropylene
into Peru and Venezuela at $1,430/mt CFR.

     Even lower offers from Asia were expected but a buyer in Peru had not
seen any new offers yet.

     "We heard offers in Asia to Latin America are going down but we haven't
received them," said a Peruvian buyer source.

     Asian offers needed to move lower as they would have to match offers from
the US that were also falling. US offers to Peru dropped $250/mt from April
and were heard this week at $1,440/mt CFR for homo raffia and injection,
$1,510/mt CFR for co-polymer and at $1,560/mt CFR random.

     In general, Asian material has a longer transit time to South America
than US PP and as a result has to sell at a lower price than US polypropylene.

     The drop in US pricing was a reflection of falling feedstock costs as
May polymer grade propylene contracts fell 12 cents to 63.50 cents/lb.
Additionally, sources anticipated further declines of possibly 6-10 cents/lb
in June. Expectations of a further eroding propylene price in the US were
extended to polypropylene. 

     The lower offers from the US and Asia were also forcing local producers
in South America to reduce their prices, sources said. In Colombia, export
offers into Peru decreased $240/mt from April to May. Following the decrease,
Colombian offers were at $1,650/mt CFR Peru for homo raffia, $1,660/mt CFR for
homo injection, $1,670/mt CFR for homo film, and $1,720/mt CFR for co-polymer.

     Brazilian export prices also fell this week. Braskem offered
polypropylene to Andean countries and Central America $40/mt lower at
$1,660/mt CFR for homo raffia, $1,680/mt CFR for film, and $1,670/mt CFR for
homo injection. Braskem's co-polymer offer only fell $10-20/mt to $1,730/mt
CFR and its random copol price was kept flat at $1,800/mt CFR. 

     "We had to move prices down to be more competitive at this moment," said
a Braskem source. 

  --Paulene Camargo, Ihsan Rahim, Kevin Allen

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