Europe July PVC settles down €40/tonne on falling ethylene costs

22 July 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European July polyvinyl chloride (PVC) contracts have settled at a reduction of €40/tonne ($57/tonne) in all regions except in the UK, where prices fell £30-35/tonne (€34-40/tonne), sources said on Friday.

The UK price fall equates to broadly similar levels in euro terms as the rest of Europe at current exchange rates.

The drop in prices was linked to falling upstream ethylene costs in July.

The July ethylene contract price settled at a reduction of €95/tonne.

PVC producers had limited July contract price falls in order to recover margins, but they could not argue for reductions lower than €40/tonne due to weak demand.

Consumption is low because buyers are destocking ahead of traditional holiday closures during August.

Coupled with this, poor macroeconomic conditions in southern Europe have reduced demand from the major downstream construction market. As a result, consumption is forecast to be 8-15% lower in July 2011 than in July 2010.

Because of weak demand in the Iberian peninsular, some sources in the region agreed reductions of €60/tonne, but this was not widespread.

($1 = €0.70, €1 = £0.88)

Additional reporting by Jane Massingham

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By: Mark Victory
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