Firming trend in European PVC markets falters in October

Following three straight months of hikes, PVC prices mostly moved sideways in October amid unsupportive market dynamics. Most suppliers stepped back from their initial small hike attempts and conceded to rollovers due to persistently weak demand and comfortable availability.

When it comes to November, players do not exclude seeing a similar trend in regional PVC markets as an improvement in supply-demand fundamentals is unlikely. Yet, steady to firmer projections for the next monomer contract may undercut producers’ margin recovery targets.

Buyers resist firmer prices

Although the October monomer settlement was agreed with limited drops, suppliers approached the market with renewed slight hike requests in an attempt to boost profitability as was the case in September. Indeed, resin price levels were still deemed too low despite the latest increases, with producers lamenting very tight or negative margins.

Sellers, however, faced strong resistance from buyers, who were not in a rush to buy given low consumption of finished goods. Hence, they had to trim their initial offers and apply rollovers from last month in order to sell. Slight gains of around €10-20/ton were sporadic, not to mention mild discounts.

Demand is sluggish, further slowdown awaited

Buyers have continued to secure their needs this month, avoiding to build stocks ahead of the upcoming year-end. Buying appetite was rather slow in their end-product businesses, while they had short visibility with regards to their order entries. Several converters kept their end-prices unchanged, without reflecting the firming witnessed in downstream PVC markets in the past months to spur demand. Others, on the contrary, decided to concede to some discounts to entice their sales, leading to mounting competition among manufacturers.

Considering that the low season is around the corner, buying interest is likely to decline further in November. The absence of relevant supply restrictions within the bloc might contribute to these weak expectations, while possibly worsening weather conditions may dent activities in the building and construction sectors further. A cautious approach, in the meantime, might continue towards imports, especially from Asia given long lead times. Still, latest South Korean prices showed up at more appealing levels amid steady falls in freight rates, with a buyer being offered PVC K58 and K65 at around €830/ton DDP, with delivery in January. Participants reported similar offers in the past weeks, but on CIF basis.

What’s in store for November?

According to players, PVC producers intend to adopt a firmer pricing policy in November owing to their ongoing profitability issues, regardless of the next ethylene settlement. Yet, stability may prevail during the month due to poor market conditions. In particular, buyers expressed their skepticism about an upturn, also considering that the beginning of contract negotiations for 2025 might push sellers to be more flexible on their pricing policies.

On the cost side, meanwhile, eyes remain on crude and naphtha price variations stemming from lingering geopolitical risks. Some participants believe that the monomer might settle stable as the upward momentum in naphtha prices has weakened during October, while others still project an increase in the November ethylene contract. In any case, PVC suppliers may struggle to recoup their margins next month given a lack of hopes for a recovery in market fundamentals.