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US PVC shows signs of destocking ahead of year-end

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 21/10/2022 (15:43)
PVC producers in the USA have been facing rising inventories as a gloomy economic scene has dimmed demand both at home and in export markets. Players see some signals that sellers might have started to deplete their stocks and may ramp up efforts to combat the supply overhang, whereas interest in US cargoes remains quite limited across the board.

According to preliminary ACC data released last week, domestic PVC inventories in the USA rose by more than 17,000 tons in September, yielding to demand contraction and a lack of production hiccups. Rampant inflation rates in the country led to successive interest rate hikes from the Fed, putting a heavy strain on the construction and housing markets of the world’s largest economy.

Bearishness sweeps Asian markets due to renewed drops from Taiwan

The cautious recovery that was witnessed in Asian PVC outlets back in early October has proved to be short-lived. The sentiment faltered with refreshed price cuts from a Taiwanese major. The producer reduced its offers by $50-70/ton for November cargos, fueling the seventh successive month of declines in the import markets.

Needless to say, the news also dragged US PVC prices down in the region’s import markets.

Lower bids weigh on US offers further in China, India

The American K67 offers broke below the $800/ton CFR mark in several outlets this week, including China and India. Despite the fact that these offers had already formed the low ends of the overall import markets, with prices in China already moving slightly below this threshold, counter bids were reported far below the recent levels.

Offers of US origins were assessed at $760-780/ton CIF China, but traders said buyers were holding out for prices as low as $650-700/ton. “We still haven’t seen any deals reported for US shipments in the last few weeks,” said a major trader in China.

Similarly, some offers at $780/ton were heard in India but were not confirmed by primary sources at the time of press.US offers are expected to keep weighing on the low end of the markets in the region.

Prices still above $800/ton threshold in Turkey and Egypt

US PVC prices have formed the low end of the dutiable K67 range in Turkey since October kicked off. Offers softened further this week to touch the $800/ton CIF threshold for December shipments. A profile maker voiced his buy idea at $750/ton for the coming term.

A global trader said, “Turkish buyers prefer to meet their limited needs from duty-free Egyptian or European cargos nowadays. End-product exports have been mild, which has curbed demand for distant US PVC further.”

Some PVC players believe that US K67 prices may see $750/ton CIF Turkey next month considering the long supply and unpromising demand outlook for the last quarter.

In Egypt, likewise, US PVC prices were $20/ton lower than a week earlier at $830-860/ton CIF with a severe USD shortage still curtailing import activity to a large extent.

Competitive US PVC also fails to stir interest in Europe

Import PVC cargos also faced thin interest from European buyers in October despite their competitive power over the region’s spot markets. Import K67 prices were reported between €950-970/ton CIF Germany/Italy for December arrival cargos with no deals at the time of publication.

The landed cost of these cargoes come to around €1060-1080/ton when all applicable costs are added. These prices carried massive discounts of around €700/ton as compared to prompt local markets but still yielded to the pressure of more competitive Egyptian origins and slack demand amid inflationary pressures and elevated utility costs within the bloc.
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