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European PVC producers: We seek full ethylene hike

  • 07/04/2016 (03:25)
European PVC producers, who conceded to discounts on their PVC prices during the month of March in spite of the globally firming trend, appear to have changed their stance this month. Producers in the region are now seeking to recover the full ethylene contract hike on their April PVC deals although they traditionally seek half of the ethylene contract increase due to its limited impact on PVC feedstock costs.

Most producers, pointing to their supply constraints, appear adamant on their hike requests, but buyers are not willing to accept these requests easily. Many buyers say they will try to limit the increases they pay to half of the ethylene contract hike amount at most.

A West European producer, who initially announced €60/ton increases on their April PVC contracts, noted, “We are aiming to reflect the entire ethylene contract hike amount on our April prices in order to be able to recover margins that we lost last month. Plus, overall demand has been good for the first quarter and we anticipate that the buying interest will improve even further in April. In addition, import market levels are not very competitive with respect to our prices and overall supplies are tight. This situation should support us in our hike requests.”

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Another West European producer, who also seeks €60/ton increases on their April prices, said, “PVC supplies are getting tighter all over the globe given planned and unplanned outages. Meanwhile, demand is also improving. Therefore, we are aiming to reflect the whole ethylene contract increase on our PVC prices.”

A producer operating in Central Europe noted, “We are targeting €60-70/ton increases on our April PVC prices in order to be able to regain our lost margins. However, our customers are yet to accept our new levels. We will remain adamant on our offer levels until the end of this week and observe the market in order to see if we will need to make an adjustment on our prices or not. However, we heard from the market that another Central European producer already sold out their April quotas with smaller increases of €35/ton from March.”

A South European producer, meanwhile, issued €45/ton increases on their April PVC offers but added that buyers are resisting the new announcements right now, waiting to see where others settle.

A PVC pipe manufacturer operating in Germany confirmed receiving €60/ton firmer offer levels for April but added that they are aiming to pay €30-40/ton increases at most. “Producers appear to be after their previously lost margins but such increase amounts are not justified since overall demand is not that supportive. In fact, we believe that PVC demand has been flat during the most part of the first quarter,” he further added.

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A trader in Germany remarked, “Our Central European and Northwest European PVC suppliers are seeking €50-60/ton increases, but it is too early in the month to have feedback from our customers. Yet, we believe that April increases will see some acceptance since import materials are tight, too.”

According to players in the region, initial April import prices for Mexican PVC are also up by €60/ton from March.
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