PVC market up from 3-and-a-half year low in Europe
PVC market shifts after 4-month downtrend on higher ethylene
In September, prices witnessed €20/ton drops in most cases in line with the lower ethylene settlement after a stable August.
Looking from a broader perspective, PVC prices have been on a downward trajectory since June 2019. This sent PVC prices to their lowest levels not seen since around April 2016 on a weekly average, ChemOrbis data showed.
PVC outages have little to no impact on overall supplies
In production news, Czech Spolana declared force majeure on its PVC supplies from Neratovice, Czechia due to VCM issues.
Inovyn started a maintenance work at its PVC plant at its Jemeppe Site, Belgium. Moreover, Anwil is reportedly running an annual maintenance work at its Wloclawek PVC plant.
Despite a spate of production hiccups across the region, players reported no major supply issues as the production loss was counterbalanced by slower consumption from the buyers’ side.
A major market participant commented, “The cable sector was affected by the weakness in the automotive sector. Demand in Turkey, where 80% of the PVC exports are diverted, is also not brisk.”
Firm costs likely to outweigh sluggish demand
Although demand is one of the key factors determining the market trend, the majority of players believe that producers will reflect rising costs on their October prices to prevent further margin erosion. Plus, PVC prices are still standing at quite low levels, players remarked.
“We assume that sellers were aware that demand conditions would not allow margin recovery this month. Therefore, they started to offer with hikes in line with the half of the ethylene’s hike. Still, we see little chance for a step back from the sellers’ side as the month wears on. Producers are likely to stand firm due to their squeezed margins,” a player argued.
Contrary to widespread expectations, some players expect PVC deals to end up with smaller increases than €10/ton or even rollovers, bearing the approaching low season in mind.
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