Asian PVC surfaces in European markets amid receding freight rates

The emergence of irregular Asian PVC origins in the European market was a noteworthy highlight of this month, coinciding with easing freight rates. This came at a time when buyers evaluate alternative sources as they await the definitive anti-dumping decision on US and Egyptian PVC imports.

Irregular Asian origins flow into Europe, albeit not at aggressive levels

Players in Italy reported receiving irregular Asian offers this month in line with significant drops in the freight rates, albeit not necessarily at aggressive levels. Prices for Asian origins were at par with the regional spot ranges. Thusly, they did not grab much buying interest.

South Korean K67-68 was offered at €960-970/ton DDP Italy, 60 days with delivery in December. Meanwhile, a Northeast Asian origin for K70 was dealt slightly below European levels at €890/ton with the same terms.

In Italy, spot ranges were last assessed at €930-990/ton for K67-68 and at €950-1020/ton for K70 on FD, 60 days basis.

The focus has now shifted to the the potential strike at US East Coast ports, which could mean supply chain disruptions and higher prices. However, if freight rates continue to slide, the potential for competitive pricing could reshape purchasing strategies and Asian material may be an alternative for European buyers.

According to ChemOrbis Stats Wizard Pro, Europe continues to stand as a net exporter of PVC, with cumulative exports exceeding 715,000 tons in the first seven months of 2024. Imports to the EU27 during January-July period reached around 318,000 tons, with the US and Mexico representing over 60% of the total imports. Meanwhile, South Korea, Taiwan and China collectively contributed 11.5% to the overall import figures during the same period.

What’s in store for October?

The European PVC market has witnessed margin expansion targets outweighing weak fundamentals for another month in September. Initial attempts by suppliers to impose hikes of up to €50/ton did not materialize as expected, primarily due to comfortable supply levels and subdued demand. Instead, many deals were concluded with increases of €10-30/ton, while rollovers were infrequently reported. In a nutshell, PVC prices posted moderate increases for the third straight month.

There is no doubt that sellers are eager to improve their margins further to bring them back to the break-even level or positive territory. It’s probable that they will start negotiations with PVC hikes despite the potential ethylene drop. Yet, buyers remain skeptical, questioning whether any further gains can be achieved in October given the prevailing market conditions. Buyers are poised to resist further hikes, particularly if demand continues to falter.

Hence, the PVC market stands at a crossroads, with margin recovery targets on one side and unsupportive supply-demand dynamics coupled with external influences like Asian imports on the other side. October prices may stabilize rather than increasing further, as some players put it.