Talk of October PE price hikes in Italy

29-Sep-11
PE players in Italy are wrapping up their September spot business with rollovers to decreases of up to €30/ton from August after some sellers revealed rollovers to increases on their initial prices earlier in the month, as per ChemOrbis. The gloomy economic outlook for Italy and for the region as a whole, amid the end of the high season for many PE applications affected converters demand this month, exerting downward pressure on sellers’ initial offers. While September agreements will be fully concluded next week, early speculations about an upturn in prices in October have arisen in the spot market, with buyers also affirming that they have been hearing talk of large price hikes for next month. Although the market still witnesses a slowdown in trading activities, producers are said to be mulling three-digit price hikes, to the surprise of buyers and local resellers who were expecting the soft trend to extend into October. Producers’ hike intentions are being attributed to unsustainable margins, with some producers reducing run rates due to subdued demand. Plus, Italy might see limited import volumes next month due to the lower euro/USD parity rate, one player speculated. A distributor in Italy reported hearing talk of €120/ton increases from European producers for October despite stiff competition in the market, while another distributor reported hearing hike intentions of €100-150/ton from a couple of West European producers. A couple of converters also confirmed hearing talk of October hikes. “A West European producer will seek increases of €100-120/ton in October and for now they are watching the monomer markets,” a buyer reported. For gentlemen’s agreements, a South European producer already revealed initial October prices €120/ton higher compared to September this week. A company source, however, admitted that there is resistance from buyers towards price hikes. Although producers appear to be firm with their October pricing policy, buyers and resellers are skeptical about such large price hikes given the general slowness in demand, globally soft PE trend and the imminent low season for many PE applications. Plus, the October ethylene contract, which is seen as an important indicator for the market outlook, settled this week at a rollover from the September level. “There is no reason for PE prices to rise while demand is so slow and supplies are ample for both PE and ethylene,” a distributor argued. “Even if PE sellers come with price hikes next month, the size of increases should be small considering the fact that the overall market conditions are still fragile,” a converter also commented.
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