European ethylene expected lower; PVC sentiment remains soft

In Europe, ethylene prices are posting decreases due to the returning crackers while early July expectations have started to surface, suggesting additional decreases in ethylene contracts. According to ChemOrbis Price Wizard, spot ethylene prices stand at a 4 month low on a weekly average.

These expectations are pushing players to take a waiting stance when imminent restarts add length to the market. As for the PVC pricing strategies, there are divergent opinions about what sellers’ approach will be in July amidst slowing demand ahead of the summer holidays after June business is about to be mostly wrapped up with small decreases.

A distributor in Italy who started offering PVC for June with rollovers at the beginning of the month will close his deals with €10/ton decreases as the market trend is bearish. He expects a €30-40/ton lower ethylene settlement in July.

A PVC compounder said, “We expect a stable to softer trend in July since naphtha is decreasing and producers have been obtaining good margins since the beginning of the year.”

Meanwhile, import offers will exert extra downward pressure on the market if they continue to stand below the local ranges. Last week, the local k67 range is reported at €930-1030/ton FD Italy, 60 days whereas import Egyptian and US offers were reported at €880-916/ton on DDP, 60 days basis.

On the other hand, sellers may not want to rush for decreases in July. A South European producer confirmed that their supply is restricted as they were unable to recover their stocks following the maintenance. A producer source reminded, “July expectations are weak considering the cost side; however, it depends on supply too.”