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Tight export volumes spark larger PVC hikes in India and Mediterranean

by Merve Madakbaşı -
  • 28/08/2020 (04:09)
Global PVC markets have been increasing since they bounced from multi-year lows in mid-May when more virus-induced lockdowns were lifted and economies started to partially recover from the pandemic.

Export volumes have been tighter recently due to a series of unexpected supply issues in Europe and the US, which paved the way for larger hikes in India, Turkey and Egypt.

Deep-sea US cargos tightened further

Export allocations from the US have reduced during the last few months. This was due to a second wave of the outbreak in the country, robust demand from major destinations including Turkey as well as unexpected supply constraints.

Formosa Plastics Corp (FPC) USA declared a force majeure on supplies from Point Comfort, Texas plant (1.2 million tons per annum) by around mid-August blaming unplanned production hiccups in its upstream chain. Adding to this, Hurricane Laura hit the Gulf Coast of the US as a powerful Category 4 storm on Thursday, leaving several polymer and olefin units offline in Texas and Louisiana.

India hit 2-year high as demand shrugged off rains

Activity has been satisfactory in the world’s largest PVC importer, India, as consumption defied the monsoon season. Export volumes to the country have been restricted in sync with healthy demand in other outlets where the construction sector improved. Moreover, October expectations emerged bullish as well now that the monsoon season is drawing to an end soon.

Import PVC K67 offers on CIF India basis have reached their highest levels since August 2018, as was mentioned in detail in ChemOrbis News India PVC market soars to 2-year high, attracting irregular origins.

Sell ideas neared $1000 CIF Turkey/Egypt

Similar to India, reinforced supply issues sent Turkey’s import K67 market to its highest level unseen since March 2018 on a weekly average. European sources continued to provide quite limited volumes to their main export destination amid run-cuts.

The weekly average data from ChemOrbis suggest that European K67 prices have soared almost 53% ($335/ton) in total since May. They were assessed $30/ton higher at $970-980/ton CIF Turkey this week.

A lack of US offers pushed the dutiable market $40/ton higher from last week, with a Turkish profile maker saying, “US sources voiced higher sell ideas of up to $980/ton CIF blaming limitations. We hope that European producers will resume offering by mid-September.”

In nearby Egypt, American PVC K67 offers were assessed $50/ton higher on the low end with sell ideas rising to as high as $970-980/ton. “Tight supply may encourage sellers to issue new hikes next week,” opined an Egyptian player.

Currently, import K67 prices are standing at their highest levels since March, according to ChemOrbis Egypt Price Index.

Favorable netbacks attracted irregular origins to India, Turkey

The absence of regular sellers pushed PVC prices to multi-year highs in India and Turkey, while also paving a way for a couple of irregular origins.

Egyptian and Saudi Arabian PVC K67 showed up between $970-990/ton CIF India, while a Vietnamese producer confirmed offering prices of up to $980/ton. The producer pointed to better Indian demand compared to virus-hit markets in Southeast Asia.

In Turkey, Chinese PVC K67 showed up at $940/ton CIF, subject to 6.5% duty, but was not widely confirmed at the time of publication.
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