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European PVC market hits 2-year high on tightness

by Manolya Tufan -
  • 16/11/2020 (04:12)
The bullish trend in European PVC markets entered its 6th month with tightness-driven hikes pushing spot prices to their highest levels in 2 years. Global firming for PVC and unusual seasonal patterns also supported sellers in their quest for hikes.

Prices move beyond pre-pandemic levels

After shifting direction as of early June, PVC prices have steadily risen to breach pre-pandemic levels. All grades of spot PVC in Northwest Europe have reached their highest levels since late November 2018, as can be seen in the graph below formed by data from ChemOrbis Price Index. K67-68 prices in Italy also hit a 2-year high on a weekly average. Prices have risen by around 35-38% since the uptrend kicked off, moreover.

No availability for extra cargos

Tightness has become the key driver of the market trend as PVC prices defied stable to slightly softer ethylene contracts for the third month.

Buyers reported improving availability compared to October in line with resumption of PVC production even if some of them still face delivery delays and trimmed quotas. Some producers prioritize their own local markets instead of exporting their material. Yet, suppliers had no availability for extra cargos as producers’ stock levels are lower than usual and they are trying to clear backlogs.

Meanwhile, Kem One, Shin Etsu and Inovyn were yet to lift their force majeures at the time of writing.

European prices attract no imports due to poor netbacks

PVC supplies are globally tight amid production hiccups in the US, Europe and Asia. Tightness is not expected to ease in the near term as it will take time to reach regular stock levels.

Fewer imports arrive to the bloc amid poor netbacks considering that European PVC markets lagged behind firming of other markets. Moreover, Asian PVC markets brace for 7th month of hikes in December, which will continue to exert pressure on European markets.

PVC demand sees unusual seasonal pattern

Demand for certain PVC applications continued to perform well amidst favorable weather conditions. Players reported that demand in the construction sector showed no slowdown and automotive demand was picking up despite renewed restrictions. A pipe manufacturer said that his order books are full until December.

Thus, buyers accepted paying increases of €50-70/ton on November deals.

“Demand is healthy in the construction and building sectors despite seasonality even if consumption in other segments is not that bright. We are sold out quickly due to a combination of good demand and restricted availability,” a few sellers highlighted.

PVC demand is likely to remain unaffected by the lockdown measures as they are not as tight as before. Yet, players are wary of logistics disruptions, which may prompt buyers to pre-buy.
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