Polyolefins bottom in Italy, upturn on the horizon

11-Jul-12
Following the sharp decreases of the monthly ethylene and propylene contracts in Europe, sellers conceded to sizeable price decreases in Italy’s PP and PE markets in the first week of July, as per ChemOrbis. Nevertheless, the sentiment has firmed up recently, particularly on the sellers’ side, buoyed by the bullish developments in the energy markets along with the rising prices in Asia. Now, many sellers are voicing bullish expectations for the near term, arguing that the bottom has been reached in the PP and PE markets. Reversal expectations first surfaced in the middle of last week. Several buyers highlighted that sellers were not making offers aggressively. Sellers, meanwhile, reported good demand for last week as many buyers engaged in purchases at competitive prices. This week, those competitive offers are not widely available as sellers preferred to withdraw their offers in anticipation of a reversal in the market trend. A South European producer who offered PP €150/ton lower and PE €100-120/ton lower for July said, “We are planning to revise our offers soon.” A West European producer also noted, “We are seeing very good demand as most of our customers have run out of stocks. The PE market will turn up in the near term as feedstock costs are higher and demand is performing much better. Buyers are also convinced that prices have hit the bottom and therefore, they are searching for material to replenish stocks.” In the PP market, price hike intentions have already emerged with distributors reporting their sell ideas €50-100/ton higher, as per ChemOrbis. A distributor commented, “We heard that a South European producer already raised its offers by €50/ton as of July 6 while a West European producer issued a €30/ton increase.” Another distributor heard about price increases from his European suppliers ranging from €70/ton to €150/ton. Buyers, in the meantime, are taking sellers’ efforts to shift the market trend upwards with a pinch of salt as the Italian market will mostly be suspended soon for summer holidays in August. A buyer commented, “Sellers are trying to keep the decreasing trend in check by speculating about price hikes.” Another buyer said to ChemOrbis, “Sellers are attempting to halt the long downward trend that has been in place in Italy’s PP and PE markets for more than two months by assuring stable to firmer prices.”
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