Mexican polyethylene buyers enter April with expectations for lower import pricing on the strength of anticipated improved US export availability, sources said Monday.
US-based traders, however, are not as optimistic about a sudden flood of US resins after an extended period of limited availability, which was ushered in by Hurricane Harvey in September.
"They think in Mexico that the US material is coming in April, and they don't want to buy right now, but they've been doing that since November and every month they don't see it," a trader said on the sidelines of the American Fuel and Petrochemicals Manufacturers annual conference in San Antonio. "They're just buying in small quantities to hold them over for two weeks at a time or a month at a time, so we'll see if its different this time, but May is more likely."
Buyers throughout Latin America -- and especially in Mexico -- entered 2018 eyeing new capacities in the US, including some that were delayed by Harvey. Strong domestic demand in the US and a slew of production issues have left most Latin American importers to source elsewhere for much of the year, sources have said.
"We may see US availability improve slightly in the short term, but the real wave might not be here until the third or fourth quarter," a second US-based trader said Monday. "Some were saying it will be like night and day with pricing once we see all this new capacity in the first quarter, but as we saw, things don't always go as planned."
This year has already seen a pair of US producers declare force majeures attributed to weather-related issues and lost feedstock supply, according to letters S&P Global Platts obtained. Additionally, some US producers are still playing catch-up with distributors in both the domestic and export markets after Harvey disrupted business in the third and fourth quarters of 2017, sources have said.
One factor buyers may be able to point to in support of lower April pricing is the expected rollover for US domestic prices in March. Producers entered the month seeking a 3 cents/lb ($66/mt) increased in the domestic market, but with increased talk that the hikes may not go through, buyers in Latin America see potential softening that could lead to more export availability and possible lower prices, sources said.
