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European PVC is set to look for export destinations in August

  • 29/07/2016 (03:39)
Polymer players in Europe are set to leave the market due to summer holidays in August. Manufacturers in the region are planning to halt their production starting from end July for two to three weeks. Now that demand in the region already started to lose steam with July business being wrapped up, European PVC is likely to be looking for export destinations during the period.

In terms of price trend, the market is closing July on a steady note with some PVC deals concluded with small hikes. European suppliers are projected to return with rollovers for August while slight discounts are seen possible assuming that sellers will be eager to generate more sales before holidays start next month. Plus, August ethylene contracts settled down €20/ton on Monday.

According to ChemOrbis Price Wizard, Italy’s local PVC market followed a decreasing trend following summer holidays last year and posted consecutive price cuts from late August to late November.
The lower upstream chain including crude oil futures and spot naphtha costs in Europe point to a possible easing for next month as well, according to some players, with no supply issues for PVC in the region voiced. In West Europe, PVC consumers are said to be aiming for around €10/ton discounts on their August deals.

Looking at possible destinations that European PVC may head to, demand in nearby Turkey was hindered since mid-July due to political turmoil and consequently rising economic concerns. The rising USD/TL parity coupled with cash flow issues keeps purchasing activity in check. A profile maker said, “The recent political tension may affect public investments in the medium term and consequently the construction sector. Buyers are limiting their purchases according to their urgent needs." Meanwhile, ChemOrbis Statistics reveal that Turkey imported slightly more than 161,000 tons of PVC during the first five months of 2016.

Indeed, irregular PVC offers from Europe emerged in Egypt’s import market during recent weeks. A trader commented this week, “The appreciation of the dollar pushed buyers to the sidelines. We think that sellers might feel pressure once US Westlake resumes operations. Plus, we may see more European cargoes coming to Egypt in August which may also affect supply-demand dynamics.”

In Asian PVC markets, supply limitations and better than expected demand in India supported the firmer trend in the PVC market during June and July despite the traditional low season given the monsoon season. Accordingly, import PVC deals for July and August shipments were done with increases in India, while expectations diverge regarding new September prices of a Taiwanese PVC major. Some players believe that the major producer may not obtain any further hikes.

In China, the PVC market remained on a firm path this week. Although falling feedstock costs cast a shadow on August expectations, limited supplies may keep any softening in check, according to players. Demand in China, meanwhile, is not as satisfactory as it is in India.

Supply from the US has been tight amidst an ongoing force majeure at Westlake Chemicals which drove domestic and export PVC offers higher. The company shut its Calvert City, Kentucky petrochemical complex due to a mechanical failure at its cracker. Westlake’s EDC, VCM and PVC capacities were all offline during a 50 day shutdown while the complex is currently in restart process. Consequently, supply out of the US may ease in the coming days.

European PVC may face challenges to find export destinations considering moderate demand in Turkey and China given economic reasons, according to some players, while easing supplies from the US may also weigh down on rollover targets from European supply sources.
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