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US PVC prices bounce on heels of eased stock pressure

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 15/05/2020 (07:29)
American PVC prices in global markets had been on a downturn since late February-early March, dragged down by virus-hit demand in global markets. Following signals for a stabilization last week, US K67 offers have rebounded from almost a 12-year low in Turkey, Egypt and China. This reflected an upward trend in export prices out of the US in the last 2 weeks.

India’s absence led to steep declines in US offers

The bearish rally sped up in mid-March since the absence of the world’s largest PVC consumer under normal circumstances, India underwent a prolonged lockdown due to the spreading of COVID-19 pandemic.

This coupled with steep losses in crude oil and feedstock prices led to aggressive PVC offers for various origins including South Korean and European. “Competitively-priced duty free PVC offers had put a stiff pressure on US producers throughout April,” noted a player.

Prices dipped to their lowest levels since November-December 2008 in major markets including Turkey and Egypt earlier in May. Last week, global participants opined that American PVC prices may have possibly hit the bottom.

Prices bottomed out after hitting late 2008-lows

American K67 prices broke below the $600/ton CIF Egypt/China threshold on the low end in the earlier days of May. Deals on a CIF Turkey basis touched as low as $600-610/ton, confirmed large buyers. This was previously mentioned in detail in ChemOrbis Plastics News US PVC dives to fresh lows as demand evaporates in global markets.

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Recently, prices gained almost 2% ($10/ton) in China and 5% ($30/ton) in Turkey when compared to last week. Import K67 offers in Egypt recorded a larger increase of 10% ($60/ton), meanwhile.

A trader in China said, “We heard that US producers are aiming for sharp price increases amid slightly firmer expectations for a Taiwanese major’s next pricing policy.” Buyers in Egypt were offered import K67 prices as high as $640-660/ton CIF Egypt this week with sell ideas up to $680-700/ton being expressed as well.

Large exports to the Middle East eased pressure on producers

Increased exports achieved in the Middle East was cited as a factor that eased US suppliers’ stock pressure. Players said, “Historic lows tempted regional buyers to secure extra PVC volumes to reduce their costs. This was also based on hopes for a recovered demand from export markets which have been hit by COVID-19 pandemic and are due for reopening in stages.”

A PVC converter in Egypt opined, “The recent rebound in prices does not stand on a strong base as demand is not likely to pick up soon given the current global situation. However, US suppliers are supported by reduced export allocations owing to more-than-usual purchasing amounts from Egyptian and Middle Eastern customers.”

A large trader in Turkey commented, “The turnaround at South Korea’s LG coupled with firm expectations for new pricing of a Taiwanese major and contributed to the shift in direction for American PVC.”
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