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European PVC market defies global softening trend in May

by Manolya Tufan - mtufan@chemorbis.com
  • 13/05/2021 (07:33)
Europe’s spot PVC markets preserved their longest rising streak ever in May, pushing prices to fresh record highs. Defying the global softening trend, Europe continued to move north on the back of intensifying tightness and robust demand.

4 producers on FM in Europe

Supply constraints have made themselves felt more profoundly, coinciding with boosted sales. Shin Etsu and Vynova joined Inovyn and Kem One in declaring force majeures as of early May.

Apart from fresh disruptions, stock levels were still critically low both on the producers’ and converters’ side. Lingering outages affecting the entire supply chain coupled with increased demand hindered producers to build their safety stocks during most of the H2 2020 and year-to-date 2021.

Italy regains premium over major markets, except for Turkey

Mainly supported by a dearth of supplies, PVC prices have been steadily rising since early June 2020. This twelve-month rally indicates the longest rising streak since ChemOrbis started keeping records in 2008.

Unlike other major markets, European spot PVC markets bucked the trend in May as deals have been closed with increases of up to €100/ton.

After trading at a discount to other markets for quite a while, Italy’s spot K67-68 market regained its premium over China and Southeast Asia’s import markets as of early April and over India and Egypt very recently. However, both Italy and Northwest Europe still trade below Turkey, which is offering one of the highest netbacks across the board.

FD – Italy – CIF – Turkey – Egypt – India – China – SEA – PVC

Will global softening dent the sentiment in Europe?

Some participants argued that an imbalance with other markets blurs the outlook on the longer run and European PVC markets may be nearing a peak. Eyes are currently locked on export markets, which have been coming off their peaks.

India, the world’s largest PVC buyer, has been grappling with a deepening COVID-19 crisis. Southeast Asian markets also witness challenges related to the resurgence of COVID-19 cases and Ramadan lull. Moreover, a Taiwanese major is expected to issue decreases on June offers to Asia amid the virus-hit demand. In Turkey and Egypt, there has been a growing resistance against surging prices due to their dependence on imports. Downstream activities in the two countries are expected to remain thin until after the Eid al-Fitr holidays.

Pakistani PVC emerges in Italy for first time ever

A Pakistani K70 offer emerged in Italy’s import market, albeit not necessarily at competitive levels. Import PVC prices are already much higher compared to Europe’s spot markets. Nevertheless, some buyers were heard to have engaged in import purchases as they were unable to find sufficient material within the bloc to be able to keep their lines running.

The emergence of an irregular origin in Europe may be linked to the waning demand across major markets. It remains to be seen if there will be bulky volumes heading to Europe in the weeks ahead.

However, regional players do not expect to see a sudden reversal, considering the fact that European producers may keep supplies in check. A source from a producer noted, “Prices may reverse the course in the second half of the year. Supplies may improve with the arrival of imports from the US following the end of turnarounds.”
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