Spot PVC K67 hits an all-time high in Italy

In Italy, the weekly average of spot K67 prices hit an all-time high at €1020/ton FD, 60 days following January hikes. This figure marked the highest level since ChemOrbis began compiling data in 2008.

Increases in line with or beyond the half of the ethylene hike have passed on transactions with the support from low inventories on the producers’ side and good demand.

Following Inovyn and Shin-Etsu, Kem One also lifted the force majeure on its PVC supplies as of early January. Overall supply levels were still deemed low, participants reported that they have less difficulty in finding material compared to the previous weeks.

Current indicators are pointing to a firm pricing for February, with spot ethylene prices widening its premium over the January contract level. Spot prices retreated recently on the back of expectations of easing tightness in Europe following restarts at Ineos and Borealis’ crackers. However, they still stand above the monthly contract level of €860/ton. Participants expect to see further increases in February ethylene contracts as spot naphtha prices also reached 1-year high recently, according to ChemOrbis data.

Import PVC availability may not find an immediate relief due to the ongoing lack of vessel availability and surging freight hikes. Plus, prices in Italy are not offering attractive netbacks when compared with the nearby Turkish market. According to ChemOrbis Price Index, the weekly average of Italy’s spot K67-68 market stands nearly $280/ton below duty-free K67-68 prices in Turkey. Under normal conditions, Italy traditionally carries a premium over Turkey.

That is to say, PVC prices in Italy have further room to move up due to the wide gap between local and export markets as well as low caustic soda prices. Early indicators point to a similar trend to January, while the size of the possible hikes may be kept in check due to the milder demand projections in line with the seasonality. Moreover, converters have difficulties to reflect rising costs on their end product prices.