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Will outages counterbalance lower ethylene in European PVC market?

  • 06/06/2017 (04:06)
In Europe, initial June PVC offers were revealed with rollovers to declines of around €10-15/ton from May following the €35/ton drop in the monthly ethylene contracts.

However, there are some production issues both for VCM and PVC in place across the region, which will limit the pressure from the cost side, according to several sellers. Some even question the possibility of seeing hike attempts from sellers soon given the expected supply reduction in the downstream PVC market as well. They also think that PVC demand should improve in June.

Looking at the production news, Poland’s Anwil shut its VCM plant in Poland as of May 30 due to a technical issue while Czech Spolana also halted production at its VCM plant in early June because of the same reason.

Spolana was also said to have difficulty in securing their ethylene needs, which will lead to output disruptions at their PVC plant in the first half of June. Belgium’s Vynova was also undergoing a VCM shutdown.

As for PVC, Vestolit is planning to conduct a maintenance shutdown in Germany throughout June and this is to be followed by Hungary’s Borsodchem with a planned maintenance in July.

In terms of prices, a Central European producer revealed its initial PVC offers with a decline of €10/ton from May given lower ethylene settlements. A company source commented that demand should improve this month as buyers secured less material in May.

A trader in Italy said, “We have already concluded some PVC deals with increases of €10/ton and buyers are accepting the increase as material is limited from Spolana and Anwil. Hence, we think that demand might improve this month given the limited supply levels.”

Although June has become the first month PVC prices turned soft since the beginning of the year across Europe, several players argue that this softening may be short-lived and the trend may firm back up in July due to supply disruptions and the expected improvement in demand.
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