Europe PVC producers adjust March price ideas on higher crude

25 February 2011 14:12  [Source: ICIS news]

LONDON (ICIS)--Players in the European polyvinyl chloride (PVC) market were re-evaluating their initial price ideas for March this week after a surge in crude oil futures threatened to raise upstream ethylene significantly above original expectations, sources said on Friday.

Despite the late stage in the month, the majority of producers were yet to formally announce their offers as they awaited a clear indication from the ethylene market, in which March contract negotiations were still ongoing.

However, on Thursday INEOS ChlorVinyls announced a €100/tonne ($139/tonne) increase effective from 1 March, or as contracts permit, citing increasing feedstock prices and the current volatility in the energy markets. 

Many sellers said that they would look to target an increase of €60-80/tonne on the expectation that ethylene would increase by at least €40/tonne.

Producers had initially expected March PVC prices to climb €20-30/tonne.

While many PVC buyers conceded that prices were likely to rise, particularly as demand was showing signs of improving heading into March, the magnitude of what was possible was a topic for debate.

Numerous converters reiterated that they were struggling to pass increases through to their own consumers and many sources both on the buy and sell side felt that the PVC industry as a whole would struggle to keep pace if ethylene movements were to eclipse €100/tonne, as this would equate to a €50/tonne increase in PVC production costs.

($1 = €0.72)

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By: Stephanie Wilson
+44 20 8652 3214

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