Soaring polystyrene prices regain premium over PP prices in Italy

Soaring polystyrene prices regain premium over PP in Italy

16-Sep-10

Spot homo PP prices in Italy moved above GPPS in the month of July right before players were sidelined for summer holidays as can be seen on ChemOrbis Price Wizard. This was the first time GPPS lost its premium and even traded at a discount compared to homo PP prices since the beginning of 2008, mainly due to a steadily decreasing trend starting from mid-April to end-July as a result of the consecutive falls registered in monthly styrene contract settlements, which was also contributed to by the ongoing sluggishness of demand. However, GPPS prices started to return to their traditional place above homo PP following the summer holidays in August, regaining their usual premium. The fact that the PS market made a firm start for August as supply concerns dominated the market outlook played an important role in the regaining of this premium. After PS buyers completely resumed their operations in September, supply tightness has been felt more strongly and large increases have started to pass in the spot market, carrying GPPS back above homo PP. Nevertheless, PS converters are quite disappointed with the noticeable hikes they have had to pay this month while they are still suffering from the poor performance of their end product markets. Some even claim that the recent price hikes are stemming from the speculation of sellers and complain that sellers are trying to benefit from the current tightness but they are putting converters in a difficult situation. Meanwhile, the PP market is not as firm as PS in Italy. Many September deals are now being concluded with rollovers while some buyers are also able to obtain slight discounts. The lower propylene contract settlement for this month along with the low demand and lack of severe supply concerns factored in the direction of the market this month. Particularly the high end of the ranges has faced pressure as sellers are reporting stiff resistance from buyers and have had to revise some of their offers down from last month.