Since the beginning of 2011, Italy’s LDPE market had been trading at a premium over other global markets including Turkey, Egypt, China and Southeast Asia, as per Chemorbis. For much of H1-2011, LDPE film prices rose steadily vs other regions as previously limited availability pushed prices higher in Europe. The high euro/USD parity rate, which maintained its strength for a long time, was one of the other factors contributing to the country’s continuous premium.
Even though Italy’s LDPE market still maintains its premium over other markets, the price gap has been narrowing since the end of May in line with a steady downward trend seen in European LDPE prices since then. The steepest decline in European LDPE prices was seen this month, accounting for much of the losses over this period. After losing €90-100/ton over the month of June, LDPE prices in Italy continued to plunge this month as well, with players reporting July offers with further decreases of €80-120/ton from June. According to one buyer’s report, sellers of West and South European LDPE film conceded to even €200/ton decreases on spot done deals this week. Apart from lower feedstock costs, massive price cuts stemmed from ample supplies versus slow demand for this product across Europe.
With the recent dive, LDPE film prices in Italy’s local market are beginning to lose their premium over prices in other global markets. For a rough comparison with import LDPE film offers to Turkey, Egypt, China and Southeast Asia after adding customs duties to the figures where applicable, ChemOrbis Price Indexes reveal that the USD equivalence of this week’s spot LDPE film range is standing around US$100/ton above China and US$50/ton above Southeast Asia on the low end as opposed to the previously larger premium. When compared with the low ends of the Mediterranean markets, the earlier premium on Italy has almost faded as the lowest LDPE offer in Egypt mainly matches the low end of the Italian market and the LDPE level in Turkey stands only US$12/ton below Italy’s low end prices reported so far this week.