Imports, slow demand and lower costs weigh on Italy’s PVC market

For the month of May, Italy’s PVC buyers have generally witnessed rollovers to €20/ton increases over April, figures also confirmed by sellers, as per ChemOrbis. Higher costs were partly behind the push for higher prices at the start of the month, plus a force majeure from Arkema at the end of April helped create a firm sentiment amongst players in Italy’s market. On the import side, the higher priced US offers have been nearly non-existent during the month, while buyers report to have received higher offers mid-month for Mexican cargoes for May shipment with June arrival. One buyer, last week, reportedly purchased Mexican cargoes with a €20/ton increase for May compared to the cargoes he had purchased in April. These offers placed prices of import Mexican material at or even above the low end of local prices. Currently, however, sentiment is shifting as demand remains poor. One PVC compounder said his business is slower compared to Q1. He theorized that his customers were destocking their lower cost stocks purchased when PVC prices were lower. He said, “At the moment we have planned order requests for the next one week in advance instead of one month. But, we hope to see a revival in June, otherwise this poor end product demand cannot be attributed to destocking activities, it would have to be a sign of very poor demand.” Other compounders concurred with the remarks about poor demand. Other PVC buyers said they are now in a waiting mood because they had already purchased what they needed earlier in the month while some said they are now awaiting their import cargoes, particularly from Mexico, which were purchased previously. As these reports took shape over the past several days it was also reported yesterday that European ethylene monomer contracts settled lower for the month of June which will pull away some support from the cost side for the PVC producers. Now, although imports are not considered to be a competitive option this week, Italian buyers look forward to lower local price levels next month due to demand conditions and lower costs. On the supply side, buyers feel availability is comfortable despite earlier production issues. Indeed a distributor of Central European origin reported to have availability of PVC due to inability to sell out materials for Italy and Turkey. He said, “All of our offices were not able to finish their monthly quotas because there is globally slow demand. Moreover, local buyers in Italy now expect a bearish trend for June so they prefer to wait this week.” On the production side, Arkema said it plans to lift the force majeure on PVC supplies from Lavera, France by the end of June following the restart of its VCM unit at the end of May. Some players speculated that the producer could lift the PVC force majeure sooner if they have no problems restarting the VCM plant.