Large hikes in European Polystyrene attract imports to Italy

In recent weeks, Polystyrene players in Italy have been reporting various import GPPS and HIPS offers from non-European supply sources, with import GPPS offers emerging €40-70/ton below the lowest local price, as per Chemorbis. Following five successive months of increases towards the end of 2010, January PS prices in Italy rose further, with European PS producers coming with massive January hikes of €100-140/ton amidst tight regional supplies, as well as a €130/ton increase in January styrene contract settlements. When looking at the USD equivalence of higher PS prices in Italy, it is seen that the country carries a premium over other global PS markets, which is rendering the Italian market as a favorable outlet to divert import cargoes especially when considering the upcoming Chinese New Year holidays, to celebrated from February 3-9. The slight recovery of the euro vs the dollar after having retreated to 1.29 last Monday, has also played a role in exporters’ growing interest in the Italian market. The euro/USD parity rate was hovering around 1.3471 as of yesterday, contributing to the competitive power of import cargoes. This week, Turkish and Pakistani GPPS offers showed up in Italy’s import market at prices considerably below the lowest local GPPS offer from a Central European supplier. Pakistani origin met buying interest on DDP Italy basis. A converter who concluded a deal for this origin reported purchasing these cargoes €60-80/ton below the local level for West and South European origins. The holiday lull in Asia also appears to have shifted Asian origins to Italy as the same buyer stated this week that he is able to find his needs from Far East Asian and South East Asian supply sources without any problems these days. At the end of last week, another buyer had reported receiving a Far East Asian HIPS offer on CFR Italy, cash basis. Healthy demand from Italian buyers, who are upset about the large increases, is another factor encouraging exporters this month. Pointing to their narrowing margins, more and more converters prefer to limit their local purchases this month. A buyer who was looking to purchase non-European materials last week said he received an Indian HIPS offer on DDP Italy basis. He commented that the price is the lowest amongst the offers he got this month. The buyer said he prefers to purchase non-European origins due to his anger with the West European producers’ constant increases. Given the existing premium over other global markets, along with good buying interest, Italy’s PS market is likely to see more non-European origins in the days ahead. This week, a converter was informed by one of his suppliers that Russian PS might also be offered to Italy towards the end of this month.