PVC sellers seek rollovers despite softer ethylene in Italy

05-Feb-14

In Italy, initial February PVC prices emerged this week after the monthly ethylene contracts settled with decreases of €40/ton from January towards the end of last week, as per the pricing service of ChemOrbis. Despite softer feedstock costs, the new PVC prices are suggesting rollovers from January in line with expectations, as sellers were initially expected to approach the market with steady prices in an attempt to protect their margins. A West European producer started giving PVC offers for their February gentleman’s agreements with rollovers from January. A source from the producer commented, “Although ethylene contracts settled lower, we are targeting to recover our margins after caustic soda costs gained ground last month. In addition, demand is not bad for some PVC applications.” A Central European producer also rolled over their February prices from last month. A producer source said, “We conceded to rollovers on PVC in January despite higher ethylene costs. Therefore, we are planning to take a firm stance on our new prices this month.” A distributor expressed his February sell ideas with rollovers from last month, commenting, “We left our prices unchanged in spite of weaker ethylene costs as we think that our supplier will initially reveal stable PVC prices.” However, the distributor did not exclude the possibility of slight discounts in the upcoming weeks. Despite the firm stance on the sellers’ side, most converters think that PVC prices have room to move lower this month. A packaging producer, who settled his January gentleman’s agreements with increases of €10-15/ton, reported, “Demand is steady and we expect to see a stable to slightly softer trend in February. We think that producers may concede to some discounts as of February 20.” According to ChemOrbis, another converter commented, “We are yet to receive new February offers but we expect sellers to reveal their initial prices with rollovers and then some discounts may be issued.” A cable manufacturer added, “The market is still stagnant and we anticipate reductions for February given softer upstream costs.”