Italian PVC players agree on weak July outlook

30-Jun-11

Converters in Italy are expressing bearish expectations for July in the PVC market, with price ideas being reported with decreases from the June done deal levels, as per ChemOrbis. Buyers are reporting that they will wait as much as possible to obtain the maximum size of decreases in July, akin to the month of June. The weakening price trends especially in Asia, where a major regional producer revealed their July prices with three-digit decreases from June, limited buying interest from Italian buyers resulting from unsatisfactory end product demand despite the season and comfortable PVC supplies across Europe are supporting buyers’ expectations for another round of PVC price decreases in Italy. European PVC sellers also agree on the weak July outlook after already conceding to price cuts of €10-50/ton from May for their spot sales to Italy. The month of June was a slow month for European sellers in terms of trading activities. Given weak market conditions across Europe, many sellers turned to other countries for export opportunities. European PVC offers showing up in Turkey, Egypt and India this month at prices standing well below the Italian market level also confirm this situation. However, based on players’ comments, European origins fail to attract healthy demand either due to their prices or the general weakness in demand. In Turkey, import PVC prices for European origins are standing around US$105-155/ton (€74-109/ton) below the early-June levels. In a rough comparison, the euro equivalent of the current European k67-68 level in Turkey is €94-150/ton lower than this week’s spot prices in Italy. When compared with this week’s import offers from Europe to Egypt and India, the price difference widens. Significantly lower July ethylene contracts which settled early this week with €95/ton decreases from June have set the tone of the market for July. Confirming the bearish July outlook, a major West European producer said they expect their customers to ask for €40-50/ton decreases next month but they will try not to give away large decreases in order not to sacrifice their margins any more. The producer pointed to the need to cover their lost margins going back to the start of this year when the PVC increases were lagging behind that of ethylene.