Lower monomer settlements reinforce bearish PP, PE sentiment in Italy

Players in Italy report that the recently settled May monomer contracts have reinforced the bearish sentiment prevailing in the country’s PP and PE markets. Lackluster demand and sufficient stock levels on the buyers’ side have been exerting downward pressure on prices in the country, while European sellers have also had to contend with competitive offers for non-European origins, as per ChemOrbis. Stiff competition from non-European import sources has already pressured European sellers active in nearby markets such as Turkey and Egypt to step back on their prices. At the end of last week, May propylene contract settled with a €15/ton decrease from April, with players attributing the slip in the contract price to softening naphtha costs along with disappointing downstream demand. The drop in the propylene contract was in line with players’ expectations in the PP market and reinforced the existing expectations for lower May prices. “We were only able to conclude some deals for small volumes in April and we expect to see some downward revision in PP prices next month,” a distributor told ChemOrbis. Another distributor also complained that they were able to sell only a very limited amount of material for April. “We have been having an increasingly hard time concluding sales towards the end of the month as buyers find our prices to be too high to accept. Widespread expectations of softer prices in May are also hampering our sales,” the distributor commented. A PP compounder reported that they purchased only a small amount of material last week as they will be shutting their plants until the second of May for the holidays. “We managed to secure some spot deals at more attractive prices last week. We find the current market prices to be too high and are therefore unwilling to consider offers standing at the upper end of the current price range,” the compounder stated. Another PP compounder who received an offer for South Korean PP block copolymer on CIF basis last week commented, “We decided not to purchase the offers we received from the import market given the long delivery time for this origin as well as our expectations of seeing lower prices for European material in May.” The May ethylene contract settled late last week with a decrease of €20/ton from April. As was the case in the propylene market, sluggish downstream demand and weaker naphtha costs were cited as the primary reasons for the fall in the contract price. The reduction in the ethylene contract added weight to players’ existing expectations of lower PE prices for May. A PE converter in the packaging sector stated, “We purchased only a limited amount of material over the past month as we had built up some stocks in January and February and did not have any urgent need for material. Demand for our end products is not that good these days and we expect to see lower prices next month in accordance with sluggish market activity.” A distributor commented, “We were only able to conclude a few deals for April as some sellers revised their prices downward in the second half of the month. We believe that prices will witness some downward movement in May.” A source at a South European producer stated, “We had initially announced higher prices for April but we are currently offering with rollovers from March as demand has not been very encouraging this month. We think that prices will record some decreases next month.”