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Modest availability from main PVC sources limits price drops in Turkey

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 05/02/2021 (08:46)
Turkey’s PVC market preserved its downtrend as muted demand kept the market under pressure in early February. Nonetheless, discounts were gradual rather than sharp due to a bunch of supply-related reasons.

Supply constraints were less challenging compared to late 2020 thanks to alternative sources, but export volumes out of two primary sources, Europe and the US to Turkey did not loosen much, which curbed larger decreases.

In 2020, France was the largest S-PVC exporter to Turkey with 119,296 tons. It was followed by the USA (68,447 tons), Spain (63,797 tons), Mexico (63,214 tons) and Egypt (60,997 tons), according to ChemOrbis Import Statistics.

Import K67 has lost 3-7% after spiking 140-150% in H2 2020

According to the weekly average data from ChemOrbis, import PVC K67 prices have slid by $53/ton (3%) for duty-free origins, while dutiable offers retreated by $103/ton (6.7%) since the market started to level off from 12-year highs in early January.

Meanwhile, import prices on CIF Turkey basis had spiked 140-150% ($910-920/ton) when the market witnessed the longest-ever rally throughout the second half of 2020.

CIF Turkey - Import Prices - PVC K67

Output disruptions kept price changes minor for European origins

A series of factors including the higher ethylene contracts, a prolonged weakness of the caustic soda market and a wide gap with export PVC prices spurred increases of €50-70/ton ($60-84/ton with recent parity) in Europe’s local market. Producers were encouraged enough to seek larger PVC hikes than the half of the ethylene gain due to the ongoing supply issues across the region.

Unlike many other import sellers and the domestic producer, Petkim, European PVC makers were reluctant to revise their offers down to Turkey regardless of the country’s huge premium over the region’s local prompt market. A trader agreed, “Sellers were strict to keep K67 prices above the $1500/ton CIF Turkey threshold.”

This was mainly because producers’ allocations were modest amid plant issues. European players affirmed, “We are unable to secure extra volumes for February amid limited availability.”

KemOne put its PVC customers on allocation due to feedstock issues at Saint-Fons and Balan sites on February 4. Also, Vynova issued a force majeure on its PVC supplies in late January.



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Upcoming turnarounds in the US also hold declines in check

Two US producers, namely Oxy and Shintech, are readying to conduct scheduled turnarounds at their PVC plants starting from late February or early March. Although buyers believe that the companies may have stocked up ahead of the shutdowns, the scene signals that exports volumes out of the country may remain limited until around April, in the best scenario.

Indeed, players in nearby Egypt reported mostly steady American K67 offers following sizable declines in the previous weeks. A participant opined, “Shipping problems are still in place. Some planned shutdowns might hold prices close to their current levels.”

Firmer March prices from Taiwan may confront aggressive Asian offers

A Taiwanese major producer revealed small increases to Asia for March cargos earlier this week. This was caught by surprise among regional players amid the nearing Chinese New Year holidays and falling ethylene prices in Asia. The news coupled with rising PVC futures on Dalian Commodity Exchange (DCE) has relatively boosted sentiment.

Some traders in Turkey and Egypt commented, “Asian suppliers have not been eager to drop prices any further recently. We may not see aggressive offers from South Korea anymore in the days to come.”

PVC consumers foresee further drops albeit in modest amounts

Turkish manufacturers are sustaining their “wait-see” stance these days out of their anticipation for additional drops in the near term. This projection is based on slowing end demand amid seasonal factors while some buyers do not expect a major pick-up in end business soon.

In case the presence of competitive Iranian, Uzbek and Egyptian materials and cautious demand persist, this may bring further corrections in price levels, according to buyers.

A profile maker commented, “Demand may be dampened in the medium-term by the upcoming Ramadan that will start in mid-April. Moreover, prices in Turkey still remain inflated and converters’ inability to compete in export markets may keep their purchasing amounts reduced.”

According to the weekly average data from ChemOrbis, the premium of Turkey’s duty-free import K67 market over Italy’s local prices has been recently down from $272/ton in late January to $190/ton amid the opposite trends in these markets.
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