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Will rollover attempts for PVC prove workable in Europe?

by Manolya Tufan -
  • 08/06/2022 (02:58)
In Europe, major PVC producers approached the market with rollovers for June amid efforts to preserve their margins following the stable ethylene settlement. However, reports of slightly better availability and lower offers from Central Europe are weighing on rollover requests , not to mention patchy demand amid inflationary pressures.

Despite rollover announcements from major producers, some suppliers issued drops of up to €30/ton depending on the starting level. Distributors of Central European material offered €25/ton discounts on their offers, considering that they were forming the upper ends of the price range. Moreover, sellers may be flexible to give small discounts for additional volumes.

Quick recap of what happened since June 2020 onwards

Europe’s PVC markets took a break from the longest rising streak in May and receded slightly from record high levels. This was following a mostly upward trend since June 2020, barring stability in December 2021 and January 2022. According to the weekly average data from ChemOrbis Price Index, prices stood roughly 2-3% below their April peaks in late May.

FD – Italy –NWE –PVC–K67-68

Overall supplies slightly improve

Producers’ stock levels remained low even after production was resumed to some extent and producers lifted force majeures. Yet, overall availability improved across the region due to a combination of returning capacities and weak performance of demand despite the high season.

CEE markets under pressure from weak demand

Not only high inflation but also war-related uncertainties and cautious stance paved the way for demand contraction in Central European markets.

The construction sector in Poland has been adversely affected by war, while the real impact will be seen in the second half of the year. High inflation took its toll on new projects. Meanwhile, some manufacturers halted production for some grades as they were originally intended to be sold to Ukraine and Russia.

Some regional producers have cut their offers to their own local markets and export markets, considering growing stocks due to weak demand at home. This is verified by slightly softer pricing policies from Central European producers.

More offers surface from Turkey

In Central Eastern Europe, participants reported to have received competitive offers from nearby Turkey, with PVC prices standing below the local price levels. This was attributed to the chronically lower demand in Turkey as well as aggressive Chinese and Russian imports.

A buyer reported to have been offered bulky tonnages of re-exported material from Turkey.

He said, “Prices were competitive but we did not buy as we have sufficient stocks.”
That was why notably lower offers were heard in Central European markets when compared to Italy or West European countries.

Compounders cut end prices to spur demand

Overall demand has been patchy, with business activity varying depending on the sector. Compounders appear to be cutting their list prices for their end products visibly to entice buying appetite as the competition got fierce among manufacturers.

Apart from that, construction activity staged a gradual slowdown amid backlog orders and pipe manufacturers reported to have been struggling with poor end orders.

Will sellers be able to hold onto stable offers despite better availability?

Supplies are improving despite lingering logistics issues hindering imports from the US. This coupled with waning demand may push PVC prices lower as the month proceeds, players argued. European PVC markets still stand well above other major markets, which keep purchases tied to basic needs. A major market participant affirmed that they are receiving orders on a weekly basis rather than monthly.
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