Weak upstream markets dampen January PVC outlook in Italy
Weighed down by bearish energy markets, spot naphtha prices lost ground over the past week to draw near to $500/ton on a CIF NWE basis. As a result, spot ethylene prices declined by €30/ton on the week and moved below the €900/ton threshold.
An agent of a Central European producer concluded some December deals €25/ton below last month while commenting that demand has been weak so far. According to the trader, the outlook is bearish for January as feedstock costs may decline further. A distributor reported, “We conceded to discounts of €20-25/ton on our December PVC deals. Demand is weak as buyers are keeping their stocks low ahead of their year end book closures. For January, the outlook is bearish and buyers are taking a wait and see stance due to widespread decrease expectations.”Another distributor made similar comments, reporting, “PVC prices will lose further ground in January if crude oil prices remain at their current levels.”
Some buyers made purchases with decreases of €20-30/ton, but they avoided building stocks due to their bearish expectations for January. A pipe producer commented, “The outlook is weak for the upcoming month due to plunging crude prices and stagnant demand. In addition, January will also be a short month in terms of working days.” A compounder said that he skipped his purchases this month as he expects PVC prices to lose further ground in January. According to the buyer, PVC prices may draw near the €700/ton threshold. A pipe producer reported that he expects ethylene contracts to settle down €20-30/ton for January given weak crude oil prices.
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