Italy’s premium on PVC over other Mediterranean markets narrows

Italy’s PVC market has been trading at a premium over other Mediterranean markets including Turkey and Egypt for some time. Price gap between Italy and these regions peaked in H1-November, when PVC sellers in Muslim countries were not seeing healthy demand due to the prolonged Eid holidays, as per ChemOrbis. Even though Italy’s spot PVC market still maintains its premium particularly over Egypt, the price gap has been narrowing since H2-November as PVC prices in Italy gradually came down since then, with the total decrease amount over the last 12 weeks reaching more than €80/ton, according to the ChemOrbis Price Index data. Mediterranean markets, on the other hand, saw relatively firmer prices particularly from US sellers over the same period. Apart from the bearish market trend in Italy, the high euro/USD exchange rate parity was another factor contributing to the recent narrowing in the price gap. The exchange rate parity retreated to 1.3274 as of yesterday after breaching the 1.38 level in early-November, which pulled the USD equivalence of the euro based offers in Italy down further. For a rough comparison with import k67 offers to Turkey and Egypt 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 currently standing around US$40-75/ton above Egypt while it has moved slightly below Turkey recently. In Italy, although PVC producers are trying to hold onto their prices, complaining about their unsustainable margins, buyers expect to see a soft trend for the rest of December as the fragile seasonal demand, softer ethylene contracts and the approaching year-end bookkeeping closures provide an upper hand for buyers. “Prices are moving close to the bottom level this month,” a converter commented, at the same time.
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