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European players discuss what lies ahead for PVC after holidays

by Manolya Tufan - mtufan@chemorbis.com
  • 22/04/2019 (09:09)
In Europe, April PVC deals were mostly closed with increases of €15/ton, which corresponds to the half of the hike in ethylene contracts, despite sellers’ larger hike attempts earlier in the month. Having secured their needs previously, buyers moved to the sidelines ahead of the Easter and bank holidays.

Production hiccups there but not alarming

Sellers failed to achieve larger hike attempts as overall PVC supplies were deemed sufficient despite the recent production hiccups in downstream PVC plants. Comfortable import availability also did not give rise to supply concerns on the buyers’ side.

Still, players confirmed that a few suppliers’ PVC availability is tight due to unplanned cracker outages across the region.

KemOne has put its PVC customers on allocation for April due to a feedstock shortage stemming from a shutdown at Ineos’ Naphtachimie cracker in Lavera, France. A company source noted, “We lost many tonnages and had to reduce our deliveries to PVC buyers.”

Poland’s Anwil, meanwhile, was reportedly running their plant at reduced rates after resuming operations in Wloclawek. The company had to shut the plant for two weeks due to a feedstock disruption, according to a source close with the matter.

Japan’s Shin Etsu started a planned maintenance work at its PVC plant in Pernis, the Netherlands by mid-April 2019. The planned shutdown is slated to last for a month.

Demand in Turkey, main export outlet, remains low

In Turkey, a large exporter of European PVC, demand failed to show the expected recovery amid parity fluctuations and a slow construction sector. A few traders reported that some European suppliers’ export allocations might be limited for May. Some players also reported, “We faced some delivery delays from Europe due to the holidays.” However, this has not led to any concerns due to smooth prompt supplies.

K70 is the only exception as it has been already tight in Turkey. According to them, k70 may see modest hike attempts due to this factor.

Ethylene contracts expected higher

Early expectations for May ethylene contracts are calling for increases of €30-40/ton and a few players also voiced expectations of larger increases of up to €50/ton.

This stems from higher energy costs as well as rising spot ethylene prices for the past three months. Spot ethylene prices have stabilized at around their highest levels in 7 months recently, according to the weekly average data on ChemOrbis Price Wizard.

Further hikes on the way but to what extent?

Higher costs are likely to lead to price hikes for another month in PVC markets. Prospects of improved demand in May also contributed to the increase expectations. Some players argued that sellers may continue to seek margin improvement next month.

A buyer affirmed, “PVC demand may see a recovery in May while we expect to see hike attempts beyond the 50% of the ethylene’s outcome for next month due to producers’ aim to recoup their margins.”

“If spot naphtha and crude oil prices sustain their uptrend, PVC prices may see increases that go beyond the half of the ethylene increase,” opined a compounder.

Demand will have the final say

On the other hand, some players think that disappointing demand may put a cap on PVC hikes. The month of May might bear a resemblance to the previous months unless demand improves, they argued.

On another note, a Taiwanese major’s price cuts to China and India has weighed on the global PVC sentiment for May pricing.
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