PVC players voice bearish February expectations in Turkey

Turkey’s PVC market started to signal a faltering in uptrend last week. An increasing number of players seemed convinced that the market reached its peak following relentless hikes. The weaker expectations for the coming term caused some buyers to go to the sidelines while an improved supply outlook added to the scene.

Prolonged supply issues gave Turkish PVC players a rough ride throughout the second half of 2020, with a tightness sparking the longest-ever uptrend in the country.

Import PVC K67 prices eased 2-3% from early Jan

The market started the new-year on a firm footing as sellers applied a new series of hikes. They counted on still-limited volumes in general and supportive upstream chain. On the other hand, players concurred, “It has been less challenging to find material this month following a severe tightness in November and December.”

A mounting resistance on the consumers’ side forced sellers to trim their initial hike requests shortly after. According to graph obtained from ChemOrbis Price Wizard below, the duty-free import PVC K67 offers has softened around 2% ($30/ton) from early January on a weekly average. Similarly, prices for dutiable origins have eased 3% ($45/ton) in the same period.



Improved supply outlook weighed on the market

Duty-free offers were down $30/ton on the low end to be assessed at $1470-1560/ton CIF Turkey, cash with the high end being formed by European prices. France’s Kem One was the last European company to lift force majeure on PVC supplies in January which triggered expectations that supply from the region may improve further next month.

A buyer secured nearby Egyptian PVC K67 on the low end of the overall range with a $60/ton decline from last week. Egyptian producers apparently resumed their export offers to Turkey in the second half of January, while lowering their prices to their own market to generate better buying interest this week.

Meanwhile, the dutiable import K67 range was notably down by $85/ton on the low end while the high end softened $20/ton week over week. The overall range was assessed at $1435-1530/ton CIF Turkey, cash. Iranian K67 at $1470-1480/ton CPT/FCA, subject to 6.5% duty stood on the low end to offer a competitive edge.

Buyers voiced their weak expectations for American PVC as Westlake was the last producer to lift force majeure on its supply. “We may see notable drops for March cargos as Chinese players are readying to leave their desks for holidays by mid-February. Plus, demand from Brazil mal cool off following bulky purchases in the last few months. American PVC has already edged down by $30/ton when compared to last week for February shipments,” a profile maker commented.

In the meantime, relatively competitive offers for alternative sources were available from traders this week. Uzbek PVC K67 showed up at a competitive level of $1400/ton CIF, subject to 3% customs duty, cash, while Russian prices at $1470-1480/ton subject to 6.5% duty failed to grab interest.

Distant cargos, including South Korean origins, continued to face thin interest from buyers due to weak expectations. In a few cases, Korean K67 was dealt slightly below the $1500/ton CIF threshold.

PVC players: Downward corrections are around the corner

During a period stretching from mid-May 2020 to early January 2021, the import PVC K67 market soared $910-920/ton (143-149%) in total from as low as $615-635/ton to $1535-1545/ton, the weekly average data from ChemOrbis suggest. Thereby, downward corrections are seen inevitable considering Turkey’s large premium over other markets, mainly Europe.

The European PVC market saw done deals rising by €35-50/ton in January on the heels of higher ethylene contracts and sellers’ need to lift their low margins. Still, Italy’s local PVC K67 market trades around $280/ton below Turkey’s duty free market. This also points to the downward pressure on Turkey for the upcoming days.