26 February 2010 23:59 [Source: ICIS news]
LONDON (ICIS news)--Polyvinyl chlorine (PVC) prices in the UK gained an average of £30/tonne (€27/tonne, $37/tonne) in February on the back of higher feedstock costs, market sources confirmed on Friday.
The increase left the range at £850-870/tonne FD (free delivered), although much variation in movements was reported, with increases pegged between £10-40/tonne depending on the source and starting point of negotiations.
A major supplier in the region commented: “It depends when contracts were settled and also on what was concluded in January. There was a bit of a dip in demand in the first half of February and then it started to pick up, so those settling towards the end of the month would have probably paid slightly more.”
Looking ahead, a number of producers were beginning to nominate increases of €25-100/tonne for March, noting that despite the rollover in upstream ethylene, significant hikes were needed in order to firm margins and recoup losses.
“We are not covering our production costs, the whole process is unprofitable and unsustainable,” a large PVC producer said. “We have a real lag between ethylene and PVC prices and we have to go out with an increase in March.”
For the main part, most manufacturers appeared to be targeting hikes of €50/tonne, but at least one had aspirations of €100/tonne.
This seller expressed frustration with its competitors’ aims, noting: “We need a significant step in March, not a marginal increase. Producers rarely achieve their full targets so we need to announce higher prices.”
The seller added: “We expect that demand in March will resurface and that it will support some increase. It is usually a good month and things have been slow from the start of the year because of the weather. Buyers will need to restock now.”
Another producer agreed with this, saying: “Stocks are balanced right now because demand is flat, but they are too low to deal with any possible pick up. Buyers could find themselves struggling to meet their requirements.”
However, the majority of buyers felt that there was no argument to raise prices.
“Demand is still 17-20% below a regular year,” a buyer said. “Ethylene is stable and this puts pressure on the targeted price increase. €50/tonne is very optimistic and anything over that just ridiculous. We will aim for a rollover or even a small decrease.”
($1 = €0.74)
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