PP and LDPE continue to rise in Italy despite low demand

15-Apr-10
A constant rising trend has been witnessed in PE and PP since the beginning of the year in the Italian market, mainly on higher costs and tight supplies, as per Chemorbis. Persistent supply problems have kept sellers stronger in their negotiations, helping them procure higher prices even in months when the monomer contracts did not rise. Many major producers have reportedly been sold out for April owing to their already limited availability. However, this uptrend lacks support from the demand side, particularly in the PP market. Regardless of the rising prices in the past four months, players are yet to report a revival in end product markets for PP. Suffering from unsatisfactory orders, buyers have been avoiding any stock-build up and are limiting their purchases to their basic requirements amid high prices. In the PE market, buying activity has slowed down once again in recent months after a short-lived improvement in demand. Believing that LDPE prices have been overheated lately, buyers are not rushing to conclude deals. For the near term, the majority of the players do not expect to see a change in market direction considering that bullish factors supportive of sellers are still in effect. The spot ethylene and propylene markets retain their strength in Europe while supplies both for PP and LDPE are not expected to ease in the short term. Further firming is anticipated for next month with a couple of early offers indicating additional increases for May. However, more players acknowledge that buy interest continues to be lethargic in the region and demand is not strong enough to support further increases. Buyers’ common complaint is that they are having a hard time convincing their customers to accept their incremental costs. This fragile state of demand will show its impact on the market direction for the medium term, players opine. While some buyers voice their expectations to see softer prices in June, sellers mostly believe that a change in market direction will occur only after June. In the PE market, further increase requests are likely to be sought for May as supply problems persist in the region particularly for LDPE. A higher outcome in the next ethylene contract would also provide further ground for sellers to ask for another round of increases. However, buyers generally expect to see stable prices in May with supplies starting to ease starting from June, when they think that the market may change course. As for HDPE, the softening can arrive earlier than that of LDPE as the availability for this product remains more comfortable, according to some sources.
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