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Downturn for American PVC gains momentum in Med markets

by Merve Madakbaşı -
  • 05/04/2019 (11:03)
US PVC opened April on a sustained downward note in response to tepid buying appetite from export destinations particularly in Mediterranean markets including Turkey and Egypt. The softening already kicked off in March across the board as waning demand has outweighed supply disruptions.

US k67 dealt below $850 threshold in Turkey

The Turkish market has been generally muted under pressure from prevailing economic uncertainties amid local elections that took place at the end of March.

Contrary to European PVC, for which upstream costs and reduced availability gave an upper hand to sellers, US offers recorded losses of around $20-30/ton for April shipments with deals below the $850/ton threshold this week.

“US PVC appears to be affordable for fewer manufacturers, considering high interest rates and challenging financial conditions,” commented a trader.

According to ChemOrbis Import Statistics, Turkey’s PVC imports from the US shrank by around 42% in January-February on a yearly basis to slightly above 12,000 tons. Still, the country was in the list of top three suppliers as converters replenished stocks for this origin with re-export documents late in 2018 and earlier in 2019.

Egypt sees lowest US prices since September 2016

US PVC prices have been softening since the beginning of March; however, the downturn appears to have gained speed in the recent weeks.

Import offers were down by almost $25/ton from last week to move below the $800/ton CFR threshold. Accordingly, ChemOrbis Price Index suggests the lowest levels since September 2016 this week.

What has driven the downturn?

Discouraging demand in export destinations is mainly blamed for the downturn of US PVC. On top of that, falling spot ethylene prices also contributed to the downward trend as they have recently hovered around 9-month low on an FD USG basis, the weekly average data from ChemOrbis Wizard revealed.

Operation updates for US PVC plants

Lower prices across the board were indifferent to reduced supplies from the country, stemming from the scheduled turnarounds at Westlake in February and Shintech in March.

OxyChem has reportedly resumed regular operations at its 250,000 ton/year PVC plant in Texas recently. The company had to run the plant at lower rates following a fire broke at a nearby tank farm of ITC (Intercontinental Terminals Co.) back in last month.

Meanwhile, Formosa Plastics was planning to shut its PVC plant for maintenance in the first week of April, which will be monitored to see whether or not reduced supplies from the plant will limit the scale of drops for American PVC this time.

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