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Traders eye August trend for US PVC after Formosa’s VCM outage

by ChemOrbis Editorial Team - content@chemorbis.com
  • 24/07/2017 (14:57)
According to market sources, Formosa Plastics experienced a VCM outage at its Point
Comfort complex in Texas, which has also reportedly affected downstream PVC operations. The company is able to produce around 750,000 tons/year of VCM at the facility.

Although this news is not confirmed by the producer itself, traders widely concur that the producer’s export PVC allocation will be limited for August. Players in the Mediterranean markets are now wondering whether Formosa’s VCM disruption will support possible hike attempts of American PVC for August shipments in global markets.

In the export destinations of US PVC, Turkey and Egypt were on a stable to softer trend since the first week of July as buying interest was mainly focused on local materials. Plus, lower ethylene costs in the USA, which hit the lowest levels since February 2016 according to the weekly average data from ChemOrbis Price Wizard, also weighed down on PVC offers out of the US so far in July.

In Turkey, a trader stated, “Formosa is facing an issue at its VCM line, which may result in reduced export quotas for PVC from the source. This could curb the discounts on American PVC in the days to come.” Another trader confirmed the news, saying, “We are yet to receive fresh offers from the source, which might be due to their recently reduced VCM output. There are also some delays.” The trader thinks that other PVC makers including Oxy and Westlake may attempt for higher prices for next month given this situation.”

A trader in Egypt also said, "Formosa is currently facing a technical problem, which resulted in tight supplies at the producer. Hence, their cargos for new shipments will be priced higher. Yet, buyers still continue to meet their needs-based requirements from the local market,” he noted.

US k67 offers were reported at $880-900/ton CIF Turkey, subject to 6.5% customs duty and 18.81% ADD, cash over the past week. The range edged down on the high end this past week amidst pressure from competitive South American cargos and a lack of healthy demand. In Egypt, US offers were quoted at $890-920/ton CIF Egypt, 180 days in the midst of a limited number of inquiries and supply constraints.
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