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Force majeure declarations rock the boat in Turkish PVC market

by Merve Madakbaşı -
  • 04/09/2020 (08:41)
Turkey’s PVC market has extended its hikes to the fourth successive month owing to robust end markets and supply constraints. Players were shaken by a renewed rally as September kicked in. Tighter global supplies urged more remarkable hikes compared to the previous weeks.

According to the weekly average data from ChemOrbis, import K67 prices have surged 60-64% ($390-420/ton) since prices turned upwards in H2 May. This followed a two-and-a-half month long downtrend amid virus-induced restrictions and oil’s collapse.

K67 hit above $1000 CFR for the first time in 6 years

European K67 offers were assessed as high as at $1070-1080/ton CIF Turkey, cash no duty despite flat ethylene contracts for September in the region. According to the weekly average data from ChemOrbis, duty-free K67 moved above the $1000/ton threshold for the first time since November 2014.

According to multiple comments, a West European producer sold a limited amount of K67 at $970-980/ton late last week, right before prices touched $1010-1030/ton. By the end of this week, sell ideas reached $1100/ton CIF as supply issues were exacerbated by new FM news from Europe and the US.

INOVYN’s force majeure took center stage

The news that INOVYN declared FM on its output fueled the bullish run and boosted price inquiries from converters. The largest European PVC maker has been among main exporters to Turkey over the years and has been trying to clear its backlogs following large sales back in early summer.

“Central European PVC producers are also suffering from production hiccups. A supplier will not have any allocations until mid-October,” a trader reported to ChemOrbis.

US supply tightened further as Westlake declared FM

Westlake Polymers issued a force majeure on PVC and VCM in early September citing the adverse impact of Hurricane Laura on its vinyl operations. Even before, US volumes to the export destinations including Mediterranean declined due to an ongoing force majeure at Formosa USA.

American PVC K67 jumped $130-140/ton just in a week to be assessed at $1060-1080/ton CIF Turkey, subject to applicable duties. Players confirmed, “No September shipments are available as most capacities are offline after the hurricane except for Shintech.”

Irregular Chinese PVC posted 3-digit hike amid bullish Asia scene

Turkey has been providing a generous netback for sellers as the market witnessed more notable hikes compared to most of other major PVC consumers elsewhere.

The profitable market attracted Chinese PVC K67 starting from late August with prices showing up at $940/ton CFR Turkey, subject to 6.5% duty. Nonetheless, offers spiked to $1060/ton this week amid buoyed demand in other markets including Brazil, as commented a player.

Bullish expectations for October pricings in Asia also contributed to the scene now that the monsoon season in India is coming to an end. Import PVC offers rose by $20-40/ton in India and Southeast Asia while prices in China soared $60/ton on the week.

Petkim hikes played a key role in local pricings

The absence of regular import suppliers coupled with an increased number of inquiries from led to consecutive hikes from Petkim. The Turkish producer has issued 3 successive hikes since August 24, bringing its total increase amount to $190/ton. Following suit, the distribution market witnessed new highs of $1380-1390/ton ex-warehouse, inc VAT on the high end for K67.

Turkey depends on imports while the country imported more than 370,000 tons of S-PVC in January-July, 2020, data from ChemOrbis Statistics revealed. This marked the highest volume for the period seen since 2017, with volumes totaling 63,000 tons in July, alone.

To track Turkey’s PVC imports by country, please click here (For members only)

To track Turkey’s PVC imports by product, please click here (For members only)

A global trader commented, “Massive amounts of PVC that were secured back in late May/June were delivered in stages amid reopening of economies and planned/unplanned production cuts. Thus, July data indicated a high figure.”

PVC consumers: Prices are inflated

Healthy end demand and reinforced shortness are likely to keep PVC strong in Turkey over the near term. Strong scene in Asia and initial offers that emerged with €50-60/ton hikes in Europe’s local market contributed to this projection.

At the same time, many players deem the recent series of hikes unhealthy and question their sustainability. “We need to meet our requirements considering our rising end product orders. Nonetheless, the market has become overrated,” complained a manufacturer.
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