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PVC snaps an 8-month downtrend, players remain skeptical in Turkey

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 02/12/2022 (12:37)
Players have been reporting upward corrections in Turkey’s PVC market pioneered by US suppliers while a cautious rebound in Asia also helped sellers to renew their confidence. The previous low ends of the market have disappeared while woes over end demand lingered and kept players on their toes.

Several buyers have been replenishing their stocks in the last couple of weeks, when Turkey hosted some leading industrial events, considering that the market bottom was imminent.

Import PVC prices posted steady drops from April to November in Turkey, succumbing to a demand collapse both at home and in other outlets. The downtrend gained momentum due to destocking activities on the part of US sellers and more-than-expected supply from Europe in November, right before prices hit bottom. During the 8-month bear run, dutiable K67 prices receded by $1175/ton while duty-free origins plunged by $1250/ton in total, the weekly average data from ChemOrbis showed.

CIF Turkey – Import prices– PVC k67

Traders encouraged by a firmer stance from US sellers

American PVC prices have recently reversed course following aggressive sales that took place in Asia, Egypt, and Turkey in the first two months of Q4.

Dutiable K67 offers were assessed $10-20/ton higher week over week. Several players reported that the US sellers were largely sold out for January, while sell ideas for February shipments were voiced with increases at $790-800/ton CIF Turkey as compared to deals at $700-720/ton back in November. A few buyers confirmed receiving higher prices while these levels have not turned into deals so far.

A global trader commented, "If we had material, we would need to offer at $800/ton CIF Turkey. A US producer has not been offering for about ten days. We plan to gauge buyers’ reaction to the recent firming in sentiment as the uptick in activity was spurred by their need to restock but not by a vivid downstream demand."

Some traders also pointed to the fact that netback in India has been comparatively better than Turkey. According to the weekly average data from ChemOrbis, Turkey’s dutiable K67 market has moved $50/ton below the import prices on CIF India basis.

Market on a knife edge as concerns over derivative demand persist

Although the firmer stance of US sellers across global markets, already-poor netbacks, and recent stock replenishments in Turkey gave traders leverage to push for higher prices, most players remain cautious regarding the sustainability of this reversal. This is due to a lack of confidence in the end markets.

A profile maker said, “Local business has been subdued in Turkey while converters had to issue sizable discounts on their product prices, leading to stiff competition. PVC sellers might be holding onto their cargos while any firmer attempts may fail later if demand woes linger across the board.”

Sustainability of upward corrections to remain under discussion

Asian markets have rebounded after a seven-month bearishness, with import K67 offers in India and export prices out of China increasing. However, players do not rule out the possibility that the global economic weakness could block a sustained uptrend ahead, not to mention the Covid-related uncertainties in China.

Similarly, there remain doubts over the recent gains and higher sell ideas in Turkey. Some sellers also admit that the low season has kicked off and economic challenges continue to hamper the construction industry, which may prevent notable PVC hikes in the coming term.

With new price announcements from the US sellers pending, players are closely monitoring the market to see how the reaction will be toward potential price increases. The persistent weakness in end-product demand is a key factor that might trigger resistance from consumers.

The impact of lower caustic soda prices and the approaching Christmas holidays on European volumes will also be monitored by Turkish converters as they need to see whether the recent recovery will prove to be short-lived or not.
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