Petrotahlil :In Italy, the PVC market resumed softening after November offers were revealed with decreases of €15/ton following ethylene drop. Some suppliers reported smaller drops to compensate their earlier losses while several sources reported that there was little incentive to hold prices steady due to unsupportive supply-demand dynamics.
However, offered discounts have yet to stir buying appetite much as buyers push to obtain further discounts given the fact that demand is quite low during this time of the year.
Spot K67-68 stands at nearly 4-year low
November drops sent all PVC grades in Italy to their lowest levels not seen since around March 2016 on a weekly average, ChemOrbis data showed.
Data also show that PVC prices lost around 5% for K67-68, 6% for K70 and 7% for k64-65 and K58 from July 2019 onwards.
Italy’s PVC market carries 9-month high premium over ethylene
In Europe, the gap between spot ethylene and K67-68 prices widened to almost €55/ton ($61/ton), the highest level since mid-February 2019 on a weekly average, according to ChemOrbis data. This was due to the fact that spot ethylene prices fell at a faster pace as a result of lengthy supplies amid low derivatives demand while PVC prices have just turned down after following a steady to slightly upward trend in October.
Some players argued that this may exacerbate pressure on the sellers’ side considering that December will not be a strong month in terms of trading activities.
Will PVC prices hit fresh lows?
Some players argued that sellers may give special discounts to reach their year-end sales targets. Some sellers have already reduced their prices more than €15/ton to be able to move more volumes ahead of the year end. On the other hand, some suppliers are not willing to lose further margins by giving discounts beyond the half of the ethylene drop.
A source from a producer said, “We reflected €15/ton drops on our offers as they were on the high ends of the price ranges. Still, buyers avoid building stocks despite competitive prices. Our margins have been squeezed during most of the year. We do not plan to sell beyond our regular quotas if our competitors apply further discounts.
Buyers may evaluate purchasing bulky tonnages to be covered in December if they can obtain further discounts, distributors argued. A compounder affirmed, “We purchased limited volumes in November as we made some stocks in October. Now, we are negotiating with our supplier to buy larger volumes.”
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