Spot polypropylene imports to Mexico from India, Asia, ME to continue through Q1

10-Mar-16

In a move that has surprised buyers, spot polypropylene exports from India, Asia and the Middle East are making their way to Mexico, as per sources in Platts. The shipments, which have a lower price tag than material from regional producers, is putting pressure on the domestic market. While sellers in Mexico can offer a significant delivery time advantage, sources indicated some have had to adjust their pricing to combat the influx of new resin. Indelpro, Mexico's sole polypropylene producer, is working to maintain its advantage by offering to place product anywhere in Mexico within a 48-72 hour window, a source said. However, there are some concerns as propylene prices in the US are moving higher while polypropylene imports from other regions are entering Mexico at lower prices. Homopolymer is the most common resin being imported from Asia, one distributor source said, at prices around US$980/mt CFR basis. Middle East product also has been more prevalent, with prices talked under US$1000/mt CFR basis. "Between January and February of this year we saw 4,000-5,000 mt of PP imported from the Middle East," a Mexican distributor said, adding that while Mexico is importing material the US seems to be doing so in even larger volumes. Polypropylene demand in Mexico has increased, sources said, with a Mexico-based distributor saying PP consumption increased 9% in 2015 compared with the prior year. Meanwhile, the US has also been importing material, which has caused prices to rise in Latin America as sellers prefer the better netbacks. "I sold PP in Houston, and I never thought that would happen," a Mexican distributor said, adding that this trend may continue until production increases in the US.