Italy’s PP, PVC and PE markets have been registering monthly price increases for January business as per the pricing service of ChemOrbis. These polymer hikes have followed higher monomer contracts in Europe at the start of 2012. The settlement of the January monomer contracts with a €20/ton increase for propylene and €40/ton increase for ethylene caused PP, PVC and PE sellers to seek price hikes after decreasing prices in the last few months of 2011.
Not only costs, but also sellers’ expectations of seeing better demand after the new year holidays have also pushed polymer producers to seek price hikes this month. While January business will be mainly concluded next week, early speculations about possible further increases for February have already arisen in the market, with some buyers starting to purchase extra volumes these days in order to avoid paying additional increases next month.
“Our end product demand is still low but we already purchased some spot PE cargoes as we expect to see further increases next month. Availability from our suppliers is not ample,” a couple ofconverters producing shoppers’ bags, reported yesterday while a pipe producer said he is currently purchasing extra volumes for PVC and PE in order to build some stocks this month. “Our end product demand is poor due to the winter season but we are pre-buying as we don’t want to pay even higher prices in February,” the buyer stated.
“We built sufficient stocks this month in order to avoid paying possible further increases in the following months. Our production needs are covered until the middle of March,” a PVC pipe producer also cited.
A PE packaging producer also reported purchasing some volumes paying increases of €70/ton for January and €100/ton for February compared to last month. “Our end product demand is normal. As we are operating in the food sector, we are not feeling the effects of the economic crisis. In the coming period, there will be further price hikes on PE as all the upstream costs for this product are moving upwards,” he added.
Expectations of further hikes in polymer prices are mainly stemming from the bullish feedstock markets, with spot propylene prices rising by €90/ton and spot ethylene prices rising by €140/ton since the start of January in Europe.
“We expect to see another round of price hikes for PP and PE in February because of the expected increases in the new monomer contracts,” a distributor reported.
A PE trader, who already obtained price hikes of €50-70/ton this month, is currently asking for new increases for their materials. “Demand is reviving this month as the sentiment amongst buyers is firming due to the expectations of further increases for February. Prices are likely to rise in February and may be also in March. Availability from our suppliers is low,” the trader commented.
“February ethylene contracts in Europe are expected to settle with three-digit increases. We are planning to reflect this possible ethylene hike on our February PVC offers,” a source at a West European PVC producer warned.
