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European PVC producers aim for entire ethylene hike

by ChemOrbis Editorial Team -
  • 05/04/2016 (17:03)
The European PVC market is tracking an upward trend at the beginning of April after ethylene contracts settled up €60/ton from last month. Receiving additional support from supply constraints, many European producers are seeking to achieve the entire ethylene hike on their April PVC deals. However, buyers have already started to voice their skepticism about such hike requests, commenting that they are planning to negotiate to limit the increases they will pay to half of the rise in ethylene contracts.

A West European PVC producer announced increases of €60/ton on their April prices. The producer’s offers for their gross contracts are at €1060-1080/ton for k67, at €1065-1075/ton for k58 and k64-65 and at €1090-1100/ton for PVC k70 on an FD Italy, 90 days deferred payment basis. A producer source commented, “We decided to reflect the entire ethylene costs to our PVC prices in order to recover our lost margins in the previous months. Demand was good in the first quarter and we expect to see further improvement in April considering supply constraints.”

Another West European producer also lifted their PVC prices by €60/ton, bringing their offers for their April gross contracts to the range of €930-960/ton FD France, 60 days. A source from the producer reported, “PVC supply is tightening due to scheduled turnarounds as well as unplanned outages while demand is improving. We are seeking to achieve the entire ethylene hike on our April deals to recover our margins.” A different West European producer is also aiming for the full extent of the ethylene hike on their initial April PVC prices, commenting that the current upward trend might extend into May.

A South European producer, on the other hand, elected to issue an increase of €45/ton on their spot PVC prices for April, which are standing in the range of €830-890/ton FD Italy, 90 days. A source from the producer said that they are yet to receive feedback from buyers.

Similar to the pricing of European suppliers, distributors across the region are also aiming for increases of €60/ton on their initial spot PVC prices for April. Meanwhile, one of the distributors claimed that a Central European producer has already sold out their April PVC allocation with relatively smaller increases of €35/ton from March.

Despite the firm stance on the sellers’ side, buyers are unwilling to pay the entire ethylene hike for their April PVC deals. A cable manufacturer in Germany received initial April PVC offers with increases of €30-40/ton after closing his March business with slight discounts of €10/ton. “We think that increases beyond half of the monomer hike are unlikely to be absorbed by the market. We aren’t rushing to make new purchases for now so we will keep making price inquiries. Demand is supposed to improve in the construction sector between April and June,” he commented.

A pipe producer in France reported receiving a few initial offers for April PVC contracts up €60/ton from last month, but said that he is seeking to pay smaller increases of €30-40/ton. A compounder in Italy reported making some early April purchases from the import market for US cargoes. The buyer said that he is seeking to pay increases of €20-30/ton at most for his April PVC deals in the local market, commenting that larger hikes of €60/ton are not justified.
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