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PVC supplies tight, demand robust across Europe

by Esra Ersöz - eersoz@chemorbis.com
  • 23/07/2020 (10:02)
Players in Europe widely confirm that PVC supplies are reduced and demand from various sectors is healthy in July. After two months of increases, the biggest question is now whether these factors will help local spot PVC prices extend gains into August.

Supply woes mounting

Concerns regarding supply tightness have grown particularly this week. There are production issues at several regional producers, with some not being confirmed but speculated among players. The lack of import material as well as the uncompetitive state of new import offers particularly from the US has also contributed to the persistent supply limitations.

According to regional players, European suppliers are also having healthy sales in their export markets and therefore, their allocations to their local markets are reduced; although players in Turkey, the main export destination for European PVC, have also been reporting tight allocations from the region for almost two months.

As a reflection of this reduction in supplies, several sellers in the distribution channel reported to have no extra volumes for July. A trader based in Italy said, “We could not meet all requests of our customers. K67-68 and K70 are the tightest grades at the moment in tandem with rising consumption from the pipe and cable sectors.”

Time to rise and shine for PVC demand

Demand is also considered sturdy for PVC applications. This month players in West Europe and Italy confirmed that pipe, construction and cable industries have performed better than June. The high season along with government incentives to combat the pandemic are also propelling end demand higher in these sectors.

Tightness contributes to improved demand

Some converters, meanwhile, are still worried about whether this improvement in their end demand will be sustainable next month given the summer holidays. Many are still not working at full capacity, wondering whether their end-customers have secured fresh volumes only to restock ahead of summer holidays. Several manufacturers particularly in Southern Europe consider organizing their holidays depending on their orders.

Thus, there remains the question of whether it is insufficient supplies adding to the spirited recovery in buying sentiment, rather than an underlying health of demand.

More hikes ahead?

Further increases, albeit in slight amounts, will be achievable, according to some. The next ethylene contract is also likely to take the lead. There are also others who expect rollovers in August in the thick of summer lull after two months of increases.
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