13 December 2010 17:12 [Source: ICIS news]
LONDON (ICIS)--Polyvinyl chloride (PVC) producer Vinnolit is targeting an €80/tonne ($105/tonne) increase, effective to all business from 1 January 2011, the German-based company said on Monday.
However, buyers are expected to resist the rise.
Vinnolit said the hike would apply to both paste and extender PVC (E-PVC), which are widely regarded as speciality grades in the PVC market.
The company said the price rise was “necessary to offset massive cost increases, especially for ethylene, and to bring the profitability of PVC specialties closer to a sustainable level".
The extender and paste PVC market has remained tight following an increase in demand – which is almost at pre-crisis levels, according to Vinnolit – and significant supply constraints during the year.
Due to the specialist nature of the grades, the producer was hopeful that the increase would be possible in January.
A company source said: “The movement represents the increase for the [first] quarter, and E-PVC is much tighter than the more standard [suspension PVC] S-PVC.”
With January ethylene contract prices expected to increase by as much as €80-100/tonne, the source added that producers had to claw back potential S-PVC losses where possible.
“There are still a few days to negotiated [December] S-PVC contracts, but the weather is not helping. It looks likely that producers will have to absorb the €15/tonne hike in production costs," the source said.
“Hopefully there will be a time when we are able to pass on the ethylene increase to our S-PVC customers, but January is not this time. We have to claw back the margin elsewhere from the chlor-alkali chain,” the source added
However, buyers were likely to resist the increase by arguing that demand would be slow in the first quarter of 2011, particularly given the current freezing weather conditions, which had so far capped the potential offtake for product in December.
($1 = €0.76)
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