Premium on PVC trading in Italy narrows as compared to global markets

16-Dec-10
Italy’s PVC market has been trading at a premium over other global markets including Turkey, Egypt and Southeast Asia for some time, as per Chemorbis. The price gap between Italy and these regions peaked mid-November, when PVC sellers in Muslim countries did not see healthy demand due to the prolonged Eid holidays. Even though Italy’s PVC market has not witnessed noticeable price hikes for the last couple of months, the country has been carrying a premium over other global markets despite the fact that these markets saw firmer prices, especially from Asian and US sellers who elected to reflect their rising costs to their prices last month. Apart from tight PVC supplies across Europe as a result of earlier production outages at regional producers, the high euro/USD parity rate, which hovered close to the 1.40 level in the first half of November after breaching this threshold earlier that month, was one of the factors contributing to the continuous premium. Although the exchange rate parity retreated gradually in the meantime, being cited as 1.34 as of yesterday, the USD equivalence of current PVC offers in Italy correspond to higher levels compared to the prevailing prices in other markets. For a rough comparison with import k67 offers to Turkey, Egypt 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 PVC k67 range in Italy is standing around US$55-70/ton above Turkey, around US$90-100/ton above Egypt and more than US$100/ton above Southeast Asia. Even though Italy’s PVC market still maintains its premium over other markets, the price gap has been narrowing for the last few weeks as PVC prices in Italy are stabilizing, with buyers expecting rollovers in January as opposed to sellers’ hike intentions. Plus, Turkey has started to see various European import offers in recent days, although the country offers a lower market level, which is an indication of the slow demand in Europe.
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