Spot PVC prices hit a new record high in Europe, no respite ahead
by Manolya Tufan - mtufan@chemorbis.com
Regional PVC markets have been on an uptrend since June 2020, barring two months of stability back in December and January. Prices hit fresh records after €45-50/ton hikes passed on March deals, while soaring energy markets and diminishing availability signal further hikes as the month wears on.
Prices hit above €1850 FD Italy threshold
March hikes pushed prices above certain thresholds. All PVC grades hit the €1850/ton FD Italy threshold or beyond this level on the low end of the price ranges, while prices on the high end breached €1950/ton for specialty grades. In West Europe, prices hit above €1750/ton on the low end and €1850/ton on the high end. As can be seen in the below graph, PVC K67-68 and K70 have set a new record in Italy.
PVC spot prices may breach new thresholds if suppliers revise their offers up later in the month, citing rallying energy costs. Indeed, a few regional suppliers found the size of March hikes limited in proportion to the spiking costs.
Europe preserves premium over other markets, comes below Turkey
Europe’s premium over other global markets remained elevated, needless to say, even though other major markets including China, Southeast Asia and India also saw moderate price gains. Expectations are bullish for next week in these markets.
Meanwhile, Europe’s spot K67 market started to trade below Turkey for the first time since early December after Turkey’s PVC markets were propelled visibly higher by supply concerns. Europe trades $50/ton below Turkey’s non-dutiable import market, while the gap between Italy and Turkey shrank to a 3-month low of $40/ton.
Players brace for strong hikes in Apr, energy surcharges under discussion
Although crude oil prices saw sharp corrections on Wednesday after UAE’s support for oil increase, Brent crude was still standing at a 9-year high. Energy prices remain under pressure, with the conflict on the eastern flank showing no signs of abating.
Spot ethylene prices reached their highest levels since ChemOrbis started to compile data in 2008 after prices saw hefty hikes of €325/ton since early February. Initial April expectations call for 3-digit hikes for the next ethylene settlement.
Accordingly, hefty increases are likely for PVC. Suppliers may seek energy surcharges in April amid margin concerns, as was the case later in Q4 2021. If producers cannot achieve cost pass-through, they mull over lowering operating rates.
A regional producer announced that they will apply an energy surcharge of €250/ton on top of the initial March hikes of €50/ton starting from March 14, 2022. The producer source added that the size of this surcharge will be updated weekly to reflect the fluctuations in energy costs.
Escalating conflict impedes import flow
On the supply front, K67-68 availability has been diminishing amid the absence of Russian and Ukrainian supplies recently but supplies for this grade are not as tight as others.
Supply snarls and logistics operations deteriorated after Russia launched a full-scale military operation in Ukraine on February 24. Most shipping lines ceased calling on ports in these countries in accordance with security measures or sanctions over Russia.
Regional turnarounds, VCM limitations and Kem One’s force majeure also curtailed monthly quotas, several players confirmed.
Converters were able to cover their requirements without much effort amid cautious purchasing activity, as a side note.
Will record-breaking PVC hikes dent demand?
This is very likely given prices at unprecedented levels and demand concerns. By all means, PVC markets will retain strength should crude oil and naphtha prices sustain firming. However, another round of strong PVC hikes doesn’t appear feasible to players. In other words, the majority believes this would dent demand.
Converters have been already grappling with rising utility costs and it got even harder to pass hikes onto finished products. A cable maker said, “A slowdown in the economy will be inevitable in case of sharp resin hikes. We may see a knock-on effect in the construction sector in the coming months.”
There is a lack of clarity as to whether or not end markets will flourish during the high season, considering geopolitical uncertainty. Manufacturers mostly keep purchases at bare minimum and avoid building stocks of PVC and finished products for now.
Prices hit above €1850 FD Italy threshold
March hikes pushed prices above certain thresholds. All PVC grades hit the €1850/ton FD Italy threshold or beyond this level on the low end of the price ranges, while prices on the high end breached €1950/ton for specialty grades. In West Europe, prices hit above €1750/ton on the low end and €1850/ton on the high end. As can be seen in the below graph, PVC K67-68 and K70 have set a new record in Italy.
PVC spot prices may breach new thresholds if suppliers revise their offers up later in the month, citing rallying energy costs. Indeed, a few regional suppliers found the size of March hikes limited in proportion to the spiking costs.
Europe preserves premium over other markets, comes below Turkey
Europe’s premium over other global markets remained elevated, needless to say, even though other major markets including China, Southeast Asia and India also saw moderate price gains. Expectations are bullish for next week in these markets.
Meanwhile, Europe’s spot K67 market started to trade below Turkey for the first time since early December after Turkey’s PVC markets were propelled visibly higher by supply concerns. Europe trades $50/ton below Turkey’s non-dutiable import market, while the gap between Italy and Turkey shrank to a 3-month low of $40/ton.
Players brace for strong hikes in Apr, energy surcharges under discussion
Although crude oil prices saw sharp corrections on Wednesday after UAE’s support for oil increase, Brent crude was still standing at a 9-year high. Energy prices remain under pressure, with the conflict on the eastern flank showing no signs of abating.
Spot ethylene prices reached their highest levels since ChemOrbis started to compile data in 2008 after prices saw hefty hikes of €325/ton since early February. Initial April expectations call for 3-digit hikes for the next ethylene settlement.
Accordingly, hefty increases are likely for PVC. Suppliers may seek energy surcharges in April amid margin concerns, as was the case later in Q4 2021. If producers cannot achieve cost pass-through, they mull over lowering operating rates.
A regional producer announced that they will apply an energy surcharge of €250/ton on top of the initial March hikes of €50/ton starting from March 14, 2022. The producer source added that the size of this surcharge will be updated weekly to reflect the fluctuations in energy costs.
Escalating conflict impedes import flow
On the supply front, K67-68 availability has been diminishing amid the absence of Russian and Ukrainian supplies recently but supplies for this grade are not as tight as others.
Supply snarls and logistics operations deteriorated after Russia launched a full-scale military operation in Ukraine on February 24. Most shipping lines ceased calling on ports in these countries in accordance with security measures or sanctions over Russia.
Regional turnarounds, VCM limitations and Kem One’s force majeure also curtailed monthly quotas, several players confirmed.
Converters were able to cover their requirements without much effort amid cautious purchasing activity, as a side note.
Will record-breaking PVC hikes dent demand?
This is very likely given prices at unprecedented levels and demand concerns. By all means, PVC markets will retain strength should crude oil and naphtha prices sustain firming. However, another round of strong PVC hikes doesn’t appear feasible to players. In other words, the majority believes this would dent demand.
Converters have been already grappling with rising utility costs and it got even harder to pass hikes onto finished products. A cable maker said, “A slowdown in the economy will be inevitable in case of sharp resin hikes. We may see a knock-on effect in the construction sector in the coming months.”
There is a lack of clarity as to whether or not end markets will flourish during the high season, considering geopolitical uncertainty. Manufacturers mostly keep purchases at bare minimum and avoid building stocks of PVC and finished products for now.
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