Turkey PVC markets shrink to 2-year lows, what lies ahead?

Import and local PVC markets continued to shed as the end of July approached. Prices broke below new thresholds this week as sellers yielded to constantly falling bids from Turkish consumers. In the meantime, players have been trying to get more clues about global market conditions as they were perplexed by the recent news from Asia and Europe.

According to the weekly average data from ChemOrbis, import and local K67 markets have sunk to their lowest levels in around 2 years following hefty July drops.

Locally-held K67 sold $300/ton below last week

The distribution market saw deals as low as $1350/ton ex-warehouse Turkey, inc. VAT this week in response to the constantly muted demand.

Lethargic post-holiday demand and plentiful supply dragged prices further down for prompt materials. The cumulative decrease since April, when the market first turned down, has surpassed $1100/ton (46%), data from ChemOrbis suggested.



Duty-free K67 breaks below $1150/ton CIF Turkey

Non-dutiable K67 offers were assessed at $1140-1180/ton CIF Turkey, cash, $50-70/ton lower than last week. According to traders, deals were scarce as most buyers continued to resist the current price levels. Egyptian cargos offered a competitive edge on the low end but were still weighed down by buy ideas as low as around $1000/ton from large buyers.

Initial European K67 offers at $1200/ton CIF indicated monthly drops as well, but they faced stiff resistance. Prices at $1120-1150/ton were also heard but were not confirmed by primary sources at the time of publication.

US PVC surfaces below the $1000/ton mark after 2 years

Dutiable K67 offers slumped $120-200/ton from last week to $980-1060/ton CIF equivalent, subject to 6.5% duty. Russian K67 prices declined by more than $200/ton in a week to $1050-1060/ton CIF equivalent, subject to 6.5% duty.

US K67 offers formed the low end of the range at $980-1030/ton CIF, subject to 6.5% customs and 32.93% AD duty. Meanwhile, some US offers on a deferred payment basis were also said to be available on the upper end. Data from ChemOrbis showed that US K67 prices were last reported below the $1000/ton CIF mark in August 2020.

Players look for a clue as Asian PVC markets seek ground

The sentiment continues to be driven by muted PVC demand amid record-high inflation in Turkey moving into August. Meanwhile, players plan to monitor global outlets to get more clues about the future trend.

In China, domestic and export PVC prices edged up, bolstered by higher Dalian futures and gains in crude oil futures this week. This triggered market discussions about whether or not Asian markets are nearing a bottom. Still, weak demand and a lack of supply issues will keep players cautious until firmer signs are in place.

Focus turns to supply outlook in Europe amid rising export volumes

Looking at Europe, PVC prices carry a huge premium over other major markets as elevated power costs kept drops in check despite inflation-hit consumption and falling ethylene contracts. A potential reduction in European output remains a factor to monitor over the near term, based on the approaching summer holidays in the region.

European PVC makers boosted their exports to nearby Turkey during the last couple of months to preserve their margins at home. Turkish players do not rule out the possibility of rate cuts at regional plants in the coming term. Some of them argued, “This would not affect Turkey much considering the abundant Russian materials.”

Other players think that Turkey’s PVC markets could be impacted if Russian sellers start to direct their cargos to other markets. "The freight advantage and the possible return of buyers following the rainy season may prompt sellers to focus more on India," opined a player. According to ChemOrbis, the gap between the import markets of Turkey and India has fallen to $35/ton recently on a weekly average.