As a result of the downward trend that has been in place in Italy's local polymer markets for more than two months, average spot prices for PP, PVC, HDPE and GPPS have recently matched the import market level in Turkey, losing their traditional premium. This suggests that Italy's local spot market should move higher in order to move back into balance.
In the PP and PVC markets, the premium was completely lost two weeks ago. Ample supplies in the region along with falling costs and poor demand were mainly blamed for the long lasting downward trend. However, the sentiment has reversed recently in Italy’s PP market after spot prices posted sizeable decreases of up to ?50-180/ton in the early days of July. Now sellers are offering higher PP prices for the second half of July in the spot market. In the PVC market, higher prices have started to emerge this week as well since players are now convinced that the bottom has been reached following the ?0-100/ton decreases that occurred in July deals. In the meantime, Turkey has seen import offers for PP and PVC from Europe for the last two weeks at levels matching the low end of the Italian local spot market.
In the PE market, a similar situation is in place. Sellers have revised their PE offers up for the second half of July after having conceded to large decreases of up to ?80/ton in the early days of the month. Even when improved demand and limited supply in the local market, along with higher costs are put aside, the global bullish sentiment is supporting a firming trend in the PE market.
When looking at the PS market, the downward trend is still maintained while other global markets have turned upwards. Growing availability concerns, higher feedstock costs and the global trend are giving a stronger hand for sellers to keep the monthly decreases in check while import European cargoes are favored in Turkey due to the advantage of the low exchange rate parity.
