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Europe’s local and export PVC markets imply further softening ahead of Aug holidays

by Manolya Tufan -
  • 25/07/2019 (04:06)
European PVC prices were on a downward trajectory due to unsatisfactory demand both in the local and export markets. Inside Europe, July PVC deals were closed €30-40/ton below June levels while export PVC offers to the nearby Turkish market have also softened after initial rollover attempts failed.

Spot K67-68 in Europe hits more-than-two-and-a-half-year low

According to the weekly average data from ChemOrbis Price Index, spot PVC K67-68 prices both in Italy and Northwest Europe retreated to their lowest levels not seen since December 2016.

Despite this, softening expectations for August prevailed among players as lower upstream costs coupled with comfortable supplies and the summer lull point to a renewed softer trend for PVC prices.

August C2 expected lower

An increased number of players pointed to the wide gap between spot ethylene prices and July ethylene contract level to justify their decrease expectations for August ethylene contracts. Plus, spot ethylene prices were down by around €70/ton on average since early July to hit €845/ton FD NWE recently, according to ChemOrbis Price Wizard.

August monomer expectations call for decreases of about €40-50/ton from July while PVC prices are widely expected to follow suit.

PVC suppliers may attempt to keep drops limited

Meanwhile, some suppliers argued that they may try to keep awaited PVC drops in check based on their margin recovery concerns and prices at multi-year lows. If buyers decide to replenish their stocks ahead of an expected upturn in September, this is believed to hinder large drops next month.

PVC buyers reluctant to build up stocks

Although divergent views were shared about the state of demand earlier in the month, underlying demand has been unsatisfactory ahead of the summer holidays and concerns over global economic growth also weighed on buying appetite.

“Demand has been slower compared to the same period of last year. Only a few buyers secured extra cargos to be covered in the post-holiday period. Supply limitations were counterbalanced by weak demand,” a distributor said.

Demand in key export market, Turkey, remains weak

Despite trimmed export quotas to Turkey, European PVC prices have been softening for the past two weeks due to the overall sluggishness in demand. European suppliers had to step back from their initial rollover attempts amid buyers’ resistance ahead of the nearing Eid-al-Adha holidays in August.

Non-dutiable K67 hits 8-month low in Turkey

Meanwhile, overall import PVC K67 prices have eased down by around $23/ton on average during the last 2 weeks, according to ChemOrbis Price Index.

The weekly average of ChemOrbis Price Index also suggests that the non-dutiable K67 market stands at its lowest levels not seen since November 2018.

Players are now wondering whether reduced export quotas of European PVC suppliers to Turkey will help cushion the downward pressure on PVC.
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