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Turkey’s PVC markets continue to go south as supply surpasses demand

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 04/11/2022 (02:32)
Prices retained their downtrend as November kicked off while increased supply from Europe put an added strain on sellers, not to mention subdued demand. According to the weekly average data from ChemOrbis, import K67 prices have tumbled to their lowest levels in more than two years.

Still, both duty-free and dutiable PVC markets stand around $200/ton above the pre-pandemic era levels of about $630/ton, the weekly average data suggested.

CIF Turkey – PVC K67 Prices

European offers see notable drops amid growing supply

Most players had expected to see restricted volumes from nearby Europe as the market headed for winter. This was bearing in mind that the region was on brink of a severe energy crisis which led to lower resin and downstream production.

Nonetheless, rising demand and prices for caustic soda led to growing PVC availability in the region, mitigating the impact of ongoing rate cuts. A West European producer initially revealed their new K67 offers at $990-1000/ton CIF Turkey but failed to achieve any done deals amid much more attractive levels, particularly for German origins that are subject to AD duty.

West European offers fell to $930-950/ton CIF by mid-week as easing supply from Europe mitigated the impact of delayed terms for Egyptian and US cargos, most of which were offered for late Q4 or even early Q1 2023.

Prices sink to new lows for December and January cargos

Egyptian K67 offers headed for a new threshold as they were down further to $820/ton CIF Turkey, with shipments scheduled for late December. There were also market discussions regarding a further slide to the $800/ton CIF level. This mark was not widely confirmed at the time of press, but gradual drops for these cargos weighed on other origins and triggered rapid discounts for European and Mexican K67 with ATR.

Dutiable K67 was assessed lower by $50-100/ton at $750-850/ton, with January shipment US cargos forming the low end of the range. These offers matched earlier expectations for American cargos, considering lower export prices and rising inventories in the US amid a global weakness in consumption and subsiding demand inside the country. In the meantime, a couple of Taiwanese and Chinese K67 offers stood at the high end of the market and faced thin buying interest.

Gloomy demand outlook keeps sentiment bearish

As high inflation and recession fears have taken their toll on derivative consumption across the board, resin demand is not projected to recover in the near term. Adding to the unpromising demand outlook has been the beginning of a low winter season. Moreover, the domestic producer, Petkim, plans to resume PVC production by mid-month now that the company has restarted its ethylene cracker.

On the other side of the coin, there is this market talk saying that caustic prices in Europe have started to level off recently. This followed a spike in demand and offers last month, which was driven by tight availability amid reduced vinyl production.

A trader opined, “We plan to observe the trajectory of the caustic soda market as PVC supply from Europe may dwindle in the coming term. Nevertheless, we do not expect to see a big impact on the sentiment as lethargic demand will likely continue to pervade the markets through the last quarter.”

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