Will hike attempts find acceptance in Europe’s PVC market?

Regional producers have not come out with any February price initiatives, with their eyes on the ethylene contracts that are yet to settle. Suppliers plan to take the pulse of the market with their slightly higher sell ideas, pointing to higher export offers, limited import volumes and a mild upturn in global markets. However, the absorbability of hikes remains to be seen.

According to players, it may be early to see PVC hikes in February, given soft demand expectations, which line up with a weak demand outlook for 2024. Although purchasing activity in January has been a tad better than December in line with restocking needs following prolonged year-end festivities, underlying demand remains subdued amid low season. Adding to the scene are slightly firmer ethylene expectations for February.

Export prices yet to gain premium over spot prices

Export prices from Europe rose slightly in line with the global supply chain disruptions affecting Mediterranean, Turkish and Asian markets. Despite the recent increase, Europe’s export prices are mostly at par with the low end of the spot ranges. That is to say, suppliers will be less motivated to export unless prices in export markets see visible gains that will encourage them to increase their export tonnages.

A player said, “It doesn’t make sense to sell to Türkiye if prices will be lower than local prices.”

Rising FOB prices from Asia also support European sellers’ hike attempts in their export markets.

Regional suppliers plan to boost exports as it would provide them with the leverage to push local prices higher as well. Not being able to export doesn’t bode well for Europe because it keeps the supply local, and prices soft.

Reversal may be seen in March

Decreases came to a halt in the PVC market, which stabilized at a 3-year low. The majority of players think that supply disruptions and curtailed imports amid the ongoing antidumping probe on US and Egyptian PVC may support firming from March, particularly if seasonal demand also lends support.

A major market participant opined, “We are not sure if activities will perform better than 2023. The global upturn may support price hikes in the local market if more European volumes flow into the export outlets, considering the fact that the Red Sea crisis doesn’t seem likely to be resolved any time soon. The spread between spot and export prices may widen in February-March period. We received many inquiries from Turkish and Mediterranean markets as prices started rising there. Boosting exports may help us to improve our margins, while this will reduce inventories within the bloc.”