Mexican polypropylene demand seen flat on year in 2012 despite 5-6% fall in US

Polypropylene demand in Mexico is forecast to be flat year on year in 2012, a source with producer Indelpro said Sunday on the sidelines of the 31st Latin American Petrochemical Association annual meeting in Buenos Aires.

"Meanwhile, we estimate US demand is down 5-6%," the source said.

Indelpro was keeping a close eye on the decrease in PP demand in the US, as this could result in US producers sending product to Mexico at discounted prices -- something another company source said was already occurring.

"It is hard to compete with PP product being sold at monomer (PGP) prices, the source said. "This has been happening."

Mexico's domestic demand has been estimated by market sources at 1.1 million-1.2 million mt/year.

Indelpro's production capacity is about 700,000 mt/year, according to Platts estimates. That leaves the Mexican market 400,000-500,000 mt/year short of product.

US spot polypropylene was heard talked in the 65 cent/lb range over the past week. Homopolymer injection on an FAS Houston basis was last assessed Wednesday at $1,422-$1,444/mt.

Meanwhile, November US contracts are expected to fall 4-6 cents/lb month on month, in line with expected monomer decreases, market sources said. The October US PP contract settled at 73-74 cents/lb.