Higher prices in November meet resistance in Italy’s PP, PS markets

Amidst the noticeable price hikes for November, players in Italy’s PP and PS markets report that buyers are generally interested in the offers closer to the low end of the spot ranges, as per Chemorbis. In Italy, sellers have come with initial hike targets of up to €40/ton for PP and €70/ton for PS both for spot business and gentlemen’s agreements. Sellers justified their large hike targets by mainly pointing to the higher propylene and styrene contracts, which were settled with increases of €18/ton and €44/ton over the October level, respectively. Tight PP and PS availability across Europe following the French strikes was cited as another reason behind sellers’ firm stance. However, converters who have been facing slower end product demand amidst the upcoming year end, as well as the fading high season for PP and PS applications, appear reluctant to concede to any hike more than that of the monomer contracts. Converters persistently complain about the sluggishness of their end product markets and difficulty faced in passing rising costs onto their downstream customers. As most buyers plan to keep purchases down to their basic requirements amidst rising prices, the upward trend in these markets are expected to be kept in check so long as buyers show limited interest to local offers. The incoming import cargoes, which stand as one of the competitive options, also provide support for buyers’ disinterest in regional producers’ higher prices. Although the theoretical cost of producing PP is nearing €1138/ton based on higher propylene contracts, offers standing at the higher end of the spot range are meeting resistance for now, with players confirming that the market tended to stabilize as of the start of this week. “Increases of €20-30/ton came from sellers who were offering at the lower end of the price range last month, while sellers who had already been offering high prices did not change their offer levels this month,” a packaging producer commented. Most converters are not rushing to conclude deals as they prefer to wait and evaluate their offers for the time being. Some traders and distributors in the PS market also admit that their sales are slow. “Demand is very slow as buyers are showing strong resistance to higher prices this month,” a trader offering at the high end of the spot range stated this week.
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