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US PVC dives to fresh lows as demand evaporates in global markets

by Merve Madakbaşı -
  • 24/04/2020 (11:50)
Global polymer markets have been hit hard by a lockdown in India that aims at containing the spreading of the COVID-19 pandemic. PVC has felt the steepest impact as the South Asian country stands for the world’s largest consumer.

Major PVC markets including Asia, Europe, Egypt and Turkey have been on a downtrend since March, yielding to sharp losses in crude oil markets and feedstock prices.

Price drops sped up in April as a lack of Indian buyers led to dramatic declines in global pricing of suppliers, including US producers.

*Right click the image and open in a new tab to view the full-sized snapshot.

American PVC offers broke below $600/ton CFR China

The reduced demand across the Asian markets led to a notable decrease from a Taiwanese major to China. This has also sent import US PVC K67 to as low as $590/ton CFR China on the low end. This was not caught by players’ surprise considering that export PVC offers out of the USA also came down visibly from last week, reflecting tepid demand in both domestic market and global outlets.

Lackluster buying appetite from the key India market, where the coronavirus-related lockdown was extended until May 3, was still blamed as the main reason behind the fall. The major producer skipped offers to India for May, which is a rare move.

“American PVC makers aim to ease their inventory pressure after the end of planned turnarounds. Aggressive US offers triggered sharp drops in China’s import market,” commented an Asian PVC producer.

Indeed, several local PVC producers have made a request to the Chinese government for initiating a dumping probe on PVC imports from the US.

Deepsea cargos form the low end in SEA import market

PVC demand stayed depressed across Southeast Asia where a fresh wave of COVID-19 cases prompted Singapore, Indonesia and Malaysia to intensify lockdown measures. Deepsea US cargos stirred up to $40/ton decreases in the region’s import markets, with K67 offers at $610-630/ton CIF SEA sitting on the lower ends.

Apart from globally tepid activity, a crash in US oil prices on Monday coupled with low VCM and EDC prices in the US exerted an extra pressure on suppliers. Spot VCM and EDC prices hovered the lowest levels since 2008, when ChemOrbis started to collect data.

Turkey saw lowest levels since 2008 crisis, offers at 4-year low in Egypt

South Korean suppliers diverted their cargos to Turkey in order to handle India’s absence. Aggressive duty-free offers from Korea weighed not only on European sellers but also US prices for which traders applied rapid discounts throughout April.

US K67 prices broke below the $650/ton CFR Turkey threshold this week, sending the weekly average to $625/ton, the lowest level since the 2008 crisis. According to data from ChemOrbis, US PVC K67 had sunk to $570/ton in November 2008 on an average and low ends had even witnessed as low as $525/ton.

In nearby Egypt, import American K67 has dipped to its lowest levels in 4 years as prices hit $610/ton CIF Egypt on the low end for short sales. “New US offers are expected to emerge later this week, presumably with further drops. Demand is not there amid the imminent start of Ramadan and US materials provide competitive options,” highlighted a trader in the country.

Competitive US offers found their way to Italy

Additionally, some American PVC K64-65 offers emerged in Italy this week while they stood €60-80/ton below the low end of the distribution market.

A player noted, “May ethylene contracts call for significant drops based on lower naphtha prices. PVC producers may intend to keep drops in check as output has already been reduced amid virus-led measures in Europe and prices stand at a 5-year low. Yet, they will also monitor import US offers which started to show up at attractive prices.”
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