Weak ethylene outlook shapes Feb PVC expectations in Italy
Players are now focused on the February outlook, with initial expectations calling for a variety of decreases from €50/ton to €100/ton for the awaited ethylene contracts. Spot ethylene prices have dropped by around €90/ton from early January levels to move below the €700/ton threshold this week. Spot naphtha prices, however, moved back above $400/ton following their recent gains and they are suggesting a small drop of over $10/ton compared to the beginning of the month which might put a cap on bearish expectations to some extent unless the upstream markets lose further ground ahead of February.
A West European PVC producer concluded their January deals with decreases of €50/ton. A source from the producer commented, “Demand has been irregular this month as buyers remained cautious due to their weak expectations for the upcoming month. For February, PVC prices are likely to lose further ground as we think that ethylene contracts might settle with decreases from €70/ton to €100/ton.” A distributor sold out his Central European PVC allocation €55-60/ton below last month. The seller commented, “The outlook is weak for February while we think that PVC prices might post relatively smaller decreases compared to this month.”
Most buyers maintained their cautious stance this month due to their expectations of seeing further reductions in PVC prices next month. A converter reported buying small volumes of spot PVC with decreases of up to €65/ton from December as he expects to find lower prices next month. According to him, PVC prices could decline further by €30-40/ton in February based on feedstock costs. A compounder reported making some purchases €55-60/ton below last month. The buyer thinks that PVC prices could post decreases of up to €30/ton depending on the awaited ethylene settlement.
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