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AFPM 2018: Venezuela polymer activity slowed by production, credit: source

San Antonio — Polymer production in Venezuela remains virtually non-existent and limited credit requires many buyers to import resins with cash against documents credit terms, a trader source said Sunday.

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"There are real struggles with buying, but when we can [sell] it is good business because most have to pay up front," the trader source said on the sidelines of the American Fuel and Petrochemicals Manufacturers annual conference in San Antonio.

Sources with knowledge of market conditions in Venezuela have have said polyethylene and polypropylene production have mostly stopped since August. Venezuela, a country rich in oil and natural gas and once a petrochemical powerhouse in South America, has seen its petrochemical production suffer in recent years amid lack of investment and feedstock supply issues.

In 2016, Venezuela had to resort to imports of LPG to maintain production of olefins and polymers. Availability of cash has been has been heard to be a major hurdle for some buyers.

Polyethylene and polypropylene production capacities of around 435,000 and 145,000 mt/year are managed by Polinter and Propilven, respectively.

Ethylene production capacity in Venezuela is estimated at around 600,000 mt/year, according to S&P Global Platts Analytics data.

Venezuelan state oil company PDVSA, meanwhile, is planning to close three of its four large refineries in the country indefinitely due to a lack of crude to process and because it does not have enough staff to operate them, union sources said Thursday. Propylene, which is the primary feedstock for polypropylene, can be produced at refineries.

US spot export resin availability has been slow for most of the year, with the trader source saying Sunday that he was seeing very little access to polyethylene, polypropylene and polystyrene from the US, and what resin was available was difficult to export based on buyer expectations of lower prices and cheaper options from Asia and the Middle East.

In some cases, FAS Houston polymer prices are almost on par with deal levels on a CFR basis in key ports along South America's West Coast. There have been some expectations that availability could improve in May.

Polymer buyers in Latin America enter April with expectations for lower import pricing, particularly in the polyethylene market, with hopes of improving availability serving as the main driver, sources have said.

After entering this year with low stocks and anticipation of low pricing from the US, buyers throughout South America were forced to adjust on the fly as export availability has been almost non-existent from the US, with any cargoes offered by traders deemed unworkable due to high pricing.

March has seen some price stability in South America after sharp rises in January and February, leading many to believe a price ceiling has been reached, sources have said.

Some producers in South America have taken note of lower Asian pricing and demand in the second half of March, implementing stable pricing in markets such as Brazil, while others have encountered resistance when trying to implement April price increases, sources have said.

--Chris Ferrell,

--Phillipe Craig,

--Edited by Richard Rubin,