Downward revision of European PVC prices for May in Italy

11-May-11

For May, European PVC sellers had announced initial price hikes of up to €50/ton in Italy’s spot market following a stable to slightly firmer PVC trend seen in April, as per Chemorbis. Sellers justified their new hike requests by pointing to the higher May ethylene contract and producers’ need for improved margins. However, persistently weak buying interest towards locally held cargoes, sufficient regional supplies, along with fluctuations in the energy market, which saw steep declines over the past week, have affected sellers’ confidence, with an increasing number of sellers revising their initial prices this week. In the spot market, a South European producer, who had initially announced a €30/ton increase to Italy in April with the hope of achieving at least €20/ton in order to lost margins in April, found it hard to sell at their new price and conceded to rollovers to €20/ton increases on spot done deals depending on the customer. The producer is firm on initial hike target in Germany, where better demand is witnessed. After rollovers at the start of May, a Central European producer has warned customers of prices being subject to increase in H2-May. However, amidst strong resistance from Italian buyers who are having great difficulty in convincing customers to pay incremental costs from the previous months, the company decided to maintain their current levels for the rest of the month to achieve smooth sales. Traders and distributors, who raised prices by around €20-30/ton over April, are complaining that buying interest is poor at these levels. At the start of the month, Italian buyers had reported an attempt to avoid paying new price hikes due to poor end product activity despite the high season. Over the first week of this month, converters widely avoided stock build-ups from the local market, with some taking advantage of relatively lower priced non-European origins. For now, buyers mostly concentrate on offers standing at the lower end of the market. According to a converter who concluded an early May settlement for his gentlemen’s agreements last week, a West European producer also conceded to smaller increases compared to their initial May prices. He said the supplier had initially asked for a €50/ton increase for May but then they conceded to smaller increases of €10-15/ton on done deals.