Bearish ethylene expectations weigh down PVC outlook in Germany
A West European PVC producer closed his December gentlemen’s agreements mainly €20/ton below last month while conceding to slightly larger discounts of €25/ton in some cases.
A converter reported that he is negotiating to settle his December PVC contracts with decreases of €25/ton from last month. The buyer expects prices to lose further ground given the bearish energy markets.
A packaging producer reported that he is negotiating with his supplier to obtain discounts of €30/ton on his December PVC contracts. “Expectations are bearish for January due to lower crude oil and naphtha costs. We project decreases of at least €100/ton for the awaited ethylene contracts. Meanwhile, producers may seek to settle the monomer contracts before Christmas in order to avoid the impact of the continuous decreases on crude prices,” the buyer commented.
A converter settled his December PVC contracts €25/ton below last month and said that his supplier did not concede to further reductions. He added, “The construction sector is stagnant and end product buyers are taking a waiting stance, so demand may remain weak in the January-February period. The outlook is bearish for January given plunging energy markets.”
The January outlook is bearish for PVC due to downward pressure from the cost side. Weighed down by weak crude, spot naphtha prices remain below $500/ton and they have witnessed a drop of over $100/ton from early December levels. For the awaited ethylene contracts, some players voiced their expectations of seeing three-digit decreases from December.
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