PVC expectations for Feb steered by upstream markets in Europe
A major West European PVC producer reported having seen good demand and limited supplies and therefore, they concluded their January deals at rollovers. As for next month, a source from the producer said, “Expectations are calling for decreases given the fact that crude oil broke below the $30/bbl level and European naphtha has dipped under a new threshold.”
A second producer from the region also pointed to the bearish outlook for next month given his expectations about seeing a decrease of €50-80/ton for February ethylene contracts. In upstream markets, spot naphtha has eroded by 23% since the end of December whereas spot ethylene has remained rather steady throughout January.
Large traders operating globally, who are concluding January deals with rollovers to €10/ton decreases, also concur with the expectations of the producers about the potential for a bearish outcome for the next ethylene contract. The decrease expectations vary from €40/ton to €60/ton for ethylene, which are also expected to weigh down on PVC. “The February PVC outlook is bearish unless a shutdown occurs in one of the major plants in the region,” said a trader.
Buyers, in the meantime, are busy with finalizing their January deals in the spot and contract markets. A pipe manufacturer in Brussels, Belgium said, “We have already obtained €10/ton discounts in the spot market while our negotiations for a rollover to €5-10/ton decreases are underway in the contract market.” As for February, they are also voicing their expectations for renewed discounts.
“Looking at the upstream markets and their losses, decreases in the PVC market are imminent,” commented a compounder in Vercelli, Italy.
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