Central Bank chairman Martin Redrado has resigned, and the peso lost ground against the U.S. dollar in recent days. No significant operational problems were reported with polyolefins producers in recent weeks. A seasonal slowdown in industrial activity led to lowered demand; although, it was still higher than in previous years. The first half of February could well be slower. Prices increased in January, and a new round of increases should happen in February.

Industrial production figures showed Brazilian output rebounding in the fourth quarter. This, despite the fact that 2009 was the worst year in the last 19 for the industry. Production rates at naphtha crackers remained high in January with the Rio de Janeiro ethane/propane unit improving its operational rates in recent days. Additional propylene capacity at the Petrobras refinery in Parana came on-stream in late 2009. Demand at the convertors level remained high in January. Feedstock prices are higher for February deliveries. Producers increased resins prices in January, and a new round of increases has been announced for February.

January’s demand for most resins was higher than anticipated. Producers “Sold Out” for many products. Lower production rates can account for this limited supply. Inventory rebuilding in January, rather than real downstream demand, could mislead producers when deciphering February’s demand. Due to higher prices for most resins, we are beginning to see some speculative buying in late January and early February. In January and most of February, prices firmed up, and if we compare early December prices, there was a significant increase – 5 to 10 cents per pound across the board. Poor supply and mild recovering demand made it possible for price increases to stick. Mexican polyolefin units reported no problems during January; however, a planned maintenance shutdown at Pemex’s swing unit is scheduled for Feb 7-20.

Cold weather continues to hit the United States. As a result, it has seen higher energy prices and some production problems for petrochemical plants on the U.S. Gulf Coast. In economic news, fourth quarter GDP growth was reported 5.7 percent higher than Q3. While news on unemployment rates for January continue to discourage consumers. We noticed a major change in U.S. production, whereby it follows demand closely and translates into little surplus as we begin 2010. Feedstock prices remain high and this will determine prices for monomers, which in turn affect derivatives like PP, PS, PVC and PET.Prices at the Henry Hub settled at US$5.51 per MMBtu. At the NYMEX, futures contract for March delivery at the Henry Hub settled at US$5.42 per MMBtu. West Texas Intermediate (WTI) crude oil decreased to US$77 per barrel or US$13 per MMBtu.