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Lethargic demand drags European PVC markets down in July

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 15/07/2022 (03:05)
PVC opened the month of July with price cuts in response to stagnant demand and falling ethylene contracts. Most sellers succumbed to the inflationary pressures that dimmed end product demand, which kept purchasing volumes below the seasonal pattern.

Lackluster activity takes center stage for another month

Europe’s spot PVC markets leveled off in June after sellers initially sought rollovers, citing steady ethylene contracts and rising utility costs. Indeed, rollover requests failed to work in several cases last month as slowing demand loomed large over the markets. The reduced number of end product orders kept purchasing volumes hand-to-mouth on the side of PVC consumers.

PVC K67 – Local Prices – FD NWE – FD Italy

Following a stable to softer trend in June, PVC prices emerged lower in July amid €100/ton lower ethylene contracts and cautious demand from derivative markets.

Elevated utility costs keep declines in check

After suppliers unveiled their PVC offers with around €40-60/ton drops over the last month, initial July deals saw declines of up to €70-80/ton. Still, elevated natural gas and power costs have capped larger decreases from sellers so far.

Nearing holidays, ample supply cast a pall on outlook

Most players do not rule out the possibility of additional drops in the latter part of July based on the fact that summer holidays are rapidly approaching. Demand has already lagged behind seasonal hopes since early Q3, while the long break is likely to dim activity further in August. "Drops of up to €100/ton may be seen on deals," said a player.

Furthermore, if logistical conditions permit, the region may attract import cargos in the medium term. This is considering the fact that all major PVC outlets have been on a downward spiral and Europe continues to provide a juicy netback for suppliers. "We expect some import cargos to arrive in September," a distributor said.

Indeed, European PVC makers have already boosted their exports to other markets, mainly Turkey, in a bid to preserve their margins in their own region. This has also kept price cuts modest so far. "We think prices may add to their losses as July proceeds, given the gloomy outlook across the board, lower crude oil futures and rising availability in Europe," opined multiple players this week.
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