After an influx of competitive non-European offers seen in Italy's local PP market for the last few months, a number of players in the country reported that European PP is currently trading at lower price levels when compared to the prevailing offers for locally held non-European materials.
As sentiment remains bearish among buyers while feedstock prices are down significantly, European PP sellers had no choice but to concede to further cuts on their offers for June in order to be able to attract buying interest. Plus, there was plenty of availability in Italy’s spot market with demand failing to show the long awaited rebound despite the season. Spot PP offers for June and sell ideas so far indicate ?0-80/ton decreases from May, with the size of the PP decreases outpacing the monthly drop in June propylene contracts.
Following the steep decreases from European supply sources, West and Central European origins are currently forming the bottom end of the overall spot range, moving below the prevailing locally held non-European origins including Middle Eastern and Indian. Non-European offers are no longer competitive in the local market, a trader commented while a distributor, who reduced their offers for a Middle Eastern origin by ?00/ton for June, admitted that his prices are still a bit high with respect to the current levels in the local market.
Although Italy's local market seems to be protected against the local non-European cargoes for now following the recent decreases on European offers, the door to imports is not completely closed considering the current theoretical PP prices to Italy based on lower June import offers to nearby countries Turkey and Egypt and the bearish market outlook in other global PP markets. The strong euro/USD parity rate is also in favor of overseas sellers.
