APIC ’09: Asian PVC sellers in Mideast market could see relief

14 May 2009 13:33  [Source: ICIS news]

SEOUL (ICIS news)--Easing price competition and lower freight costs are likely to bring some relief to Asian sellers in the Middle East’s polyvinyl chloride (PVC) market, traders and producers said on Thursday

Middle East buying interest in Asian cargoes has been declining since last year after competitively priced US-origin parcels started making their way into the market, traders said.

However, poor pricing conditions could soon force US chlor-alkali producers to cut back their export volumes, market sources said.

“Last year, US producers could rely on the high caustic soda values to make up for the poor margins from their chlorine business,” according to one trader, who was speaking on the sidelines of the Asian Petrochemical Industry Conference (APIC) in Seoul, South Korea.

“But now that caustic soda prices have also plummeted, they cannot afford to cut their PVC prices further.”

Caustic soda and chlorine are produced simultaneously during the same manufacturing process. PVC is a chlorine derivative.

According to a market source, already one major US producer has not been seen to be exporting any cargoes to the Middle East in the past two months.

One US producer had also announced a price increase for its June domestic PVC cargoes, while values of US PVC exports for June delivery were also expected to increase, traders and producers said.

US PVC export prices were last week assessed at $630-670/tonne (€466-496/tonne) FOB (free on board) US Gulf, according to global chemical market intelligence service ICIS pricing.

US-origin PVC cargoes for June delivery could gain by $40-50/tonne FOB US Gulf, an Asian PVC producer said.

The prices of such cargoes would be almost on-par with Asian parcels by the time they arrived in the Middle East, market sources said.

Selling ideas for northeast Asian PVC cargoes in the Middle East were mostly heard in the high-$700s/tonne CFR (cost and freight) GCC (Gulf Cooperation Council)

Lower freight costs have also helped soften the blow of keen price competition in the Middle East, Asian traders and producers said.

PVC shipping costs from northeast Asia to the Middle East have varied over a wide range but have fallen from as high as $100/tonne last year to around $70 this year, a trader said.

Asian PVC cargoes are usually sold into the Middle East on a CFR basis.

APIC '09 began on 14 May and ends on 15 May.

($1 = €0.74)

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By: Ng Hun Wei
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