Europe PVC sellers nominate €50-75/tonne hikes for Feb contracts

29 January 2010 16:40  [Source: ICIS news]

LONDON (ICIS news)--European polyvinyl chloride (PVC) producers intend to increase February contract prices by €50-80/tonne ($69-111/tonne), citing rising feedstock costs, strong export demand and tightening availability, market sources said on Friday.

The increase was spearheaded by major manufacturer INEOS ChlorVinyls, which was targeting hikes towards the higher end of the spread, at €75/tonne.

“We have seen a better [European] demand in the second half of the month. And, although this could be due to some pre-buying ahead of the increases in February, the [upstream] ethylene settlement [of €940/tonne] took us all by surprise and was concluded too late in the month for buyers to really start purchasing,” said a source close to PVC production at INEOS ChlorVinyls.

The seller added: “Costs are shooting through the system and while exports are lifting the numbers, everyone is in the same position. The market is long but we have to move on this.”

This was echoed further up the chain, where ethylene dichloride (EDC) players said that surging upstream costs, coupled with weak demand and pricing in the PVC market, were crushing margins.

However, buyers' perceptions were mixed.

“Producers’ stock levels are still very high [relative to demand], because we had such a late start to the year with all the cold weather. This is balancing the market and they will not be able to increase significantly in February,” a major pipe manufacturer said.

Another pipe manufacturer said: “If demand picks up, the market could tip into a tighter supply because it is so finely balanced. Much of what they can achieve will depend on the strength of demand in February, but I think the time for decreases and rollovers could be over.”

($1 = €0.72)

For more on PVC and EDC, visit ICIS chemical intelligence
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By: Stephanie Wilson
+44 20 8652 3214



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