FocusTurkey PVC market to rebound

02 November 2007 10:30  [Source: ICIS news]

By Adal Rafiq

 

LONDON (ICIS news)--The Turkish polyvinyl chloride (PVC) market was hopeful that it was on the verge of a price recovery due to rising US prices, market sources said on Friday.

 

“There had been an expectation among sellers that 2007 was now more or less over”, said one source noting that the bullish tones heard a few months ago, were now distant, and there had been no real recovery since the end of Ramadan.

 

“A lot of the pressure has come from global nervousness surrounding the US housing market”, said a trader.

 

“US export prices to Turkey were the first to fall, followed by prices from Asia,” it added. US exports to Turkey have been boosted by sluggish domestic demand, leading to a decline in Asian offers. This was despite relatively stable demand, said the trader.

 

Asian offers to Turkey were last heard below the $1,100/tonne CFR (cost and freight) Asia in the range $1,070-1,080/tonne.

 

“This should not last beyond this week,” however, said another source, expecting prices to rebound by $30-40/tonne (€20-27/tonne) due to higher production costs.

 

“US producers are being squeezed, by crude, natural gas, naphtha and ethane,” the source continued, adding that this was bound to be translated to US PVC prices.

 

Although sources said demand for PVC had declined steadily in October, feedstock ethylene prices have been on an upward trajectory for several months, and sources said the market looks poised to make future gains.

 

“The impact of rising prices in the US cannot be overstated,” said another source.

 

Turkish producer Petkim reduced its domestic PVC contract prices by a further $80/tonne effective from 1 November.

 

The new contract price for S23 grade is $1,190/tonne, S39 is $1,225/tonne and S27-S65 grades are $1,180/tonne.

 

All contracts are on a FCA (free carrier) Aliaga basis (excluding VAT).

 

The latest decrease from Petkim was possibly a sign of an approaching resurgence, said another source.

 

PVC consumption was estimated at 740,000 tonnes/year, and some sources have said it is set to hit 1m tones/year by 2010.

 

At the moment, 82% of Turkey’s needs have had to be covered by imported PVC.

 

($1 = €0.69)

By: Adal Rafiq
+44 20 8652 3214

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