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Spot PVC K67 hits fresh record highs in Italy

by Manolya Tufan -
  • 15/03/2021 (03:22)
Having steadily risen for the 10th straight month, European PVC markets witnessed sharper gains in March amid deepening shortage, widening gap between spot and export markets, as well as robust buying appetite. Prices in Italy have subsequently climbed to fresh record highs.

Hikes of up to €190 see acceptance

PVC deals have been closed with hikes ranging between €80/ton and €190/ton, well beyond the March ethylene hike of €75/ton. This was because supply/demand is unbalanced as demand far outpaces existing capacity. Last but not least, lower caustic soda prices were another reason behind steep hikes.

According to ChemOrbis Price Index, Italy’s spot K67-68 market hit fresh all-time highs, with the weekly average price hitting €1170/ton FD last week. Prices had hit an all-time high for the first time back in January this year. Other PVC grades also stand at all-time highs.

Data also showed spot K67-68 prices in Northwest Europe hit their highest levels since June 2014.

Europe by far lower than export markets

Europe’s PVC market lagged behind the firming of other markets, which skyrocketed due to their exposure to imports amid low availability and global shipping turmoil. Since Europe is a net exporter of PVC, its local markets rose at a slower and more controlled pace, as can be seen from the Product Snapshot obtained from ChemOrbis below.

*Right click the image and open in a new tab to view the full-sized snapshot.

CIF Turkey/Egypt/India/SEA – Import SPVC K67-68 – Prices

Whilst import markets surged in the past one month, Italy and Northwest Europe posted relatively smaller gains during the same period.

*Right click the image and open in a new tab to view the full-sized snapshot.

FD Italy/NWE– Local SPVC K67-68 – Prices

As the bullish run gained momentum in non-European markets, regional producers issued hefty March hikes to prevent the gap between spot and export markets from widening further but to no avail. Europe’s and Italy’s spot K67-68 markets stand well below the duty-free market in Turkey, where the weekly average prices stand at $1855/ton on CIF terms. This marked a fresh record high for the duty-free market, as a side note.

Spot prices in Italy trade $465/ton below Turkey’s duty-free prices on CIF basis, the weekly average data on ChemOrbis Price Index showed. FD NWE prices trade with a greater discount of over $500/ton, meanwhile.

US disruptions amplify global supply crunch

A slew of planned/unplanned production outages across the board and weather-driven supply disruptions in the US have served to reinforce the global bullish run. Prices climbed higher in a knee-jerk reaction to offline capacities in the cold-hit US, where several upstream and downstream units were forced to shut down by mid-February. Although some plants are in the restart process, it will take some more time to fully return to normal production. Moreover, Shintech and Oxy will be conducting PVC maintenance in March.

Similarly, European producers are also conducting maintenance works between March-April. That is to say, PVC supplies are set to remain restricted amid lingering outages.

Production News

Demand outpaces supply levels

Suppliers reported that they have sold out their monthly quotas quickly and easily due to extremely low stock levels on the side of both producers and converters. It has been challenging to find enough material both in the spot and contract markets to keep manufacturing lines running, several players reported.

Moreover, end demand has also been supportive as consumers purchased material to hedge against further price increases amid availability concerns. Compounders may have to halt their lines amid a dearth of PVC and plasticizers.

Although supply woes drive demand higher, there remains the question of to what extent increases can be absorbed due to the inability to reflect sharp hikes on end-product prices.
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