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European PVC set to rise for 11th month in April

by Manolya Tufan -
  • 29/03/2021 (03:55)
The run-up in Europe’s PVC markets is set to extend into Q2, which would mark the 11th straight month of hikes. Players are now evaluating how things will evolve in an environment characterized by supply shortages and high season.

Voices for hikes surpassing April C2

April ethylene contracts are awaited to settle with hikes of around €50/ton. Several players reported that PVC suppliers would not follow 50% of the ethylene’s outcome, as was the case for the past couple of months.

With the support from supply restrictions, suppliers mull over hikes surpassing the entire ethylene hike. PVC suppliers may even issue 3-digit increases depending on lower caustic soda prices as well as the wide gap between spot and export markets.

No supply relief on near horizon

Participants argue that the supply situation may deteriorate, let alone a supply relief after several months of shortage. This is because maintenance shutdowns will add to the tightness emanating from force majeure events, chronically low producers’ stocks, and the lack of imports.

“April will be a challenging month in terms of supply. Supplies may start to improve in May-June after the end of maintenance works,” a player noted.

Producers pledge to prioritize regular customers. This could make it difficult for converters to secure their needs, and it will add a premium to spot market material.

Promising demand outlook amid high season

The fact that high season for major PVC applications kicks off will spur PVC consumption, which encourages customers up and down the chain to secure more than usual volumes.

Demand in certain sectors has been performing well recently amid restocking activities of end consumers. A pipe manufacturer reported, “We received requests from irregular customers, which is probably due to the tightness of finished products.”

PVC suppliers reported to have received a good number of order entries for next month, as a side note.

Downstream rates may be scaled down on deepening shortage

Stock levels on the manufacturers’ side are already low, considering robust end-demand and PVC shortage. A pipe maker affirmed, “We could obtain 10-30% less than what we ordered in March. We also faced allocation cuts in the contract markets due to production outages.” Converters have managed to keep their lines running despite trimmed allocations during March.

Moving into April, manufacturers may have to lower rates or even take their lines offline not only due to the PVC shortage but also the tightness of plasticizers. According to participants, two major European producers’ force majeure declarations have tightened the plasticizers market to a great extent. One of the producers has reportedly revoked the force majeure recently, meanwhile.
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