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European PVC producers ungenerous in Turkey: Prices up 21% in a month

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 12/06/2020 (11:36)
Turkey’s import PVC market bounced from 12-year lows in mid-May in a quick response to an upturn in global markets. The reverse in trend was prompted by the resumed consumption in Asia where nations including the key Indian market gradually ended the virus-led lockdowns.

The waning exports from Europe and the US to Turkey caused the rally to speed up in June which coincided with a recovery in Turkish end markets .

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European K67 sees $800/ton CFR Turkey and above

Surging PVC prices in China and Southeast Asia for July shipments amid vivid demand coupled with bullish ethylene prices on a global scale fueled the bullish run. A lack of sufficient allocations from the US for June cargos also added to the relentless increases in Turkey.

European PVC K67 offers were assessed $60/ton higher week over week at $800-810/ton CIF Turkey, cash no duty following deals at $750/ton just a week ago. The latest hikes have sent the duty-free K67 market to almost a 3-month high, while the cumulative increase surpassed 20% from mid-May.

Reduced export allocations from Europe hit the headlines for PVC

Large converters confirmed being unable to receive fresh offers from their European suppliers. Profile makers lamented, “Supply is quite low somehow while our regular suppliers have not replied to our inquiries blaming their lack of material. Adding to this, Korean, Russian and Ukrainian sources directed their cargos to other markets including India amid healthy demand and some shutdowns.”

Regional sources have been ungenerous when it comes to providing supply to Turkey. “Turkey might have been the cheapest PVC consumer for some time which resulted in huge increases in the aftermath of bear market in March-April,” opined a trader.

Ethylene snapped 3-month long decreasing streak, lent support to sellers

European ethylene contracts were also cited among the triggers behind the stronger attitude of suppliers. The monomer contracts settled up for June after consecutive drops from March to May.

Players in Europe reported to ChemOrbis, “Although demand for PVC lags behind the pre-virus levels, it has shown signs of recovery towards mid-June. PVC deals have reflected the half of ethylene contracts in most cases.” Adding to the firming trend, several producers continue to run their plants at modest rates.

Re-opening of domestic and foreign markets spurred end demand

Manufacturers confirmed the bull market, while they also reported an improvement for end product demand including for doors and floorings recently. The recovery was attributed to the gradual re-opening of export outlets as well as the lifting of COVID-19 measures in Turkey on June 1.

A buyer argued, “3 state banks initiated lower loan rates and helped house inventories to deplete. Demand for pipes and other applications has picked up. Still, the housing sector will need new projects on the longer run amid the lingering economic challenges due to the undeniable impact of pandemic. If not, PVC prices may see a correction after a certain point.”
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