In the past few days, sellers sentiment has begun to firm up in Italy’s local PE market as per ChemOrbis. Following the earlier price cuts, some traders in Italy are now up-revising prices as market sentiments have seen a shift on improving demand from buyers, supply concerns for the post-holiday period as a result of the ongoing and scheduled plant shutdowns at some regional producers and firmer feedstock prices. Over H1-July, spot activity was slow as buyers who were looking to obtain larger decreases mainly refrained from stock building from the local market amid the upcoming long summer holidays and unspectacular end product demand. According to ChemOrbis Price Indexes, Italy’s spot PE market lost €70-100/ton for HDPE film and blow moulding and €110-1140/ton for LDPE film compared to end June due to a combination of lower feedstock costs, pile up of stocks on the sellers’ side and weak demand conditions. This week, a distributor reported raising HDPE blow moulding price for Serbian origin by €20/ton compared to the start of this month due to demand from buyers who are ordering fresh material for August to secure some volumes before the long summer holidays while a trader claimed to have sold some West European LDPE with a €50/ton increase from the start of this month. “With respect to early July, there is less material in the market,” he stated, showing dwindling supplies as a reason for his price hike. “So far, buyers have consumed existing stocks and now they need fresh material, competitive prices are becoming scarce in the market,” he underlined. A packaging producer also confirmed higher spot prices, saying that he received €50/ton higher offers for West European and Middle Eastern HDPE film this week.
Although buyers had already started to question the sustainability of the decreasing trend in the earlier weeks considering the recent upturn in many other global PE markets and their need to replenish stocks, the majority does not expect to see any price hikes up until September. For now, spot ethylene prices are €25/ton above early July prices while naphtha costs reached a two-month high on Tuesday to US$86/ton (€61) above early July level. Looking at the costs side, a theoretical cost of PE, which was calculated by adding an estimated €150/ton conversion cost and inland freight costs on top of the current spot ethylene prices but excluding sellers’ margins, is currently supporting HDPE sellers offering at the lower end of the spot market. In a rough comparison, however, the high end of the spot market is still standing around €180/ton and €230/ton above the theoretical PE costs for HDPE and LDPE respectively, which may put a cap on any price hike requests from PE sellers who are offering at the higher end of the price ranges.