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Availability concerns for PVC fail to prevent discounts in Europe

  • 15/06/2017 (08:50)
In Europe, rollovers to decreases of up to €17/ton started to pass in PVC deals after planned and unplanned production issues at some regional producers’ VCM and PVC plants failed to have a considerable impact on the PVC market in the face of buyers’ reluctance even though demand is relatively better given the low stock levels at some converters.

A buyer in Belgium confirmed, “We skipped purchasing from Central European sources as they had no material for this month. Demand is good in the profile industry, but it will slow down in July due to the summer holidays.”

Some sellers are still pushing for rollovers to limit softening and preserve their margins, citing their limited quotas. On the other hand, buyers who receive June offers with rollovers to slight decreases prefer to wait to see whether they can obtain further discounts.

A buyer from France reported concluding deals in the spot and contract markets with decreases of €17.5/ton, adding, “There is no reason to justify sellers’ rollover attempts following a €35/ton decrease in June ethylene contracts. They already recovered their margins in the first five months of this year. We expect decreases for July too.”

The cost side remains as a pressure point on PVC. In the upstream markets, ethylene prices were seen declining since the second half of April due to the returning crackers from maintenance shutdowns. Although they have recently found some support from the late restart of a global producer’s steam cracker, lower naphtha prices are expected to exert pressure on the ethylene market, which have already paved the way for stable to softer expectations for July contracts.

Competitive import PVC offers were cited as another reason for softer expectations for July given the current gap between local prices and imports. In Italy, an Egyptian PVC k67 offer on DDP basis is standing almost €50/ton below the low end of the local k67 range this week while several buyers are also considering buying US material as they offer relatively attractive levels.
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