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European PVC markets fall, ending a rising streak of 2 years

by Manolya Tufan -
  • 09/05/2022 (02:46)
Regional PVC markets have seen drops for the first time as May kicked off, snapping the longest-ever rally since June 2020. To be more precise, April has been the price peak for PVC after prices followed a mostly upward trend, barring stability in December 2021 and January 2022, for 23 straight months.

Prices rise by a good 200% from trough to peak

Before PVC prices hit their peak in April, they were on an uptrend stretching from June 2020 to April 2022. According to ChemOrbis Price Index, spot K67-68 prices on a weekly average increased by around 200% from trough to peak.

FD – Italy –NWE –PVC–K67-68

As can be seen in the graph above, prices in Italy still stand at an all-time high after reversing the course in May. This was because fresh offers indicated only modest decreases from April, while rollovers were also seen in some cases.

Sellers yield to C2 drop, reflecting half of it on initial PVC offers

May PVC drops are limited to €30-35/ton in most cases, reflecting the half of the ethylene drop. PVC markets had defied €10/ton softer ethylene settlement back in December 2021, however.

The state of demand has been what changed sellers’ approach to the market back in December and now. Late last year, buying activity remained relatively supportive, which helped sellers to maintain their prices.

However, inflationary pressures and overheated resin prices, highest across the board, pushed European PVC buyers to the sidelines. This has put a strain on sellers’ earlier intentions to hold onto their offers in May, taking reduced PVC supplies into consideration.

Players report tighter availability

After Vinnolit, Inovyn declared force majeure on its PVC output from European plants in early May. Apart from Kem One putting customers on allocation, other regional producers’ PVC or VCM plants have undergone scheduled maintenance turnarounds.

This coupled with curbed import flow led to tighter availability, which were amplified by transportation challenges amid exacerbating logistics operations. Uncertain delivery times and foggy outlook kept demand for imports subdued.

Woes over demand, however, appears to have finally outweighed supply limitations, several players concurred, as the correlation between PVC and ethylene has been detached for a long while.

Demand has the final say

Although there has been a decline in overall consumption, participants describe demand as patchy.

Slackening demand appears to have been the key driver of recent softening as resistance has mounted given inflated levels and buyers limit purchases to their urgent needs.

Although some sources report better buying interest, this is related to a lack of sufficient stocks at certain producers rather than an improvement in end demand. A buyer reported, “We are seeing better demand from April, but we may not be able to cover all orders as all of our monthly quotas are not confirmed by our suppliers.”

A myriad of uncertainties amid unfolding events in Eastern Europe and woes over energy supplies also lead to a cautious mood among buyers. Prices are subject to variations during the month depending on how supply-demand dynamics will evolve.
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