European PVC market looks for direction after a lackluster month
Where do prices stand at present?
According to ChemOrbis Price Index, the weekly average of all PVC grades on FD Italy/Northwest Europe basis declined to their lowest since 2016 by the mid-fourth quarter of last year and have remained there ever since.
Hike attempts thwarted in holiday-thinned market
European markets defied the firm trend that emerged in other global markets in late December to early January. Although some producers were reported to be mulling margin recovery, their hike attempts failed to come to fruition due to subdued demand and holiday-thinned trade.
Jan deals roll over amid hand-to-mouth buying
January deals were done at unchanged levels from the previous month in Italy, with converters procuring on a need-only basis. From the supply viewpoint, Italian players said the overall availability remained more-than-comfortable in the market.
It was a similar scene for Northwest Europe, which saw deals done at rollovers from December. West European players also reported buying small quantities of cargoes this month as they had already stocked up.
First C2 contract of 2020 stable from Dec
The monthly ethylene contract price for December was fully agreed with a mild increase of €10/ton from November in Europe. On the other hand, the first ethylene contract for 2020 was agreed at a rollover from December, leaving non-integrated downstream players with very little to pass through to their offers.
Feb C2 contracts expected to reflect higher spot market
The new ethylene contract for February is expected to move up, tracking higher spot prices in the month. Several sources said they expect an increase of €10-20/ton from the January settlement, with spot prices increasing by 10% in the past 30 days.
The recent increases were said to be a result of tighter supply, rather than demand.
Expectations stable-to-firm going into Q1
As PVC offers generally see a cost pass through of around 50% of the contract price movement, there were some early talks of upward pricing pressure for February. Other factors influencing the expectations were an expected recovery in demand ahead of the high season for some PVC applications and sellers seeking to recover margins that have been eroded over the past few months.
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