Venezuela’s Pequiven close to closing PVC purchase from Mexichem

09 September 2011 21:40  [Source: ICIS news]

HOUSTON (ICIS)--Venezuela’s polyvinyl chloride (PVC) producer Pequiven is close to completing the purchase of resin from producer Mexichem, pending agreement on payment terms, according to sources close to either side of the negotiations.

The price negotiated was not available.

A first shipment of 4,000–5,000 tonnes of mostly pipe and fittings grades of PVC is expected to arrive in Venezuela in October from Mexichem’s plant in Colombia. Future resin shipments may also originate from Mexichem’s PVC plant in Mexico, according to the sources.

Meanwhile, Pequiven is rationing domestic-resin shipments to private industry to 75–80% of historical consumption, as the government steps up the production of subsidised low-cost houses with a high PVC content, called petro-casas.

The petro-casas project will be supplied exclusively with resin produced by Pequiven, while private industry will receive imported PVC complemented with some domestic product through 2012. Eventually, all domestic production will be targeted exclusively to the petro-casas.

Pequiven’s production rates are normal, but the company is rationing resin shipments to private industry until PVC imports arrive once negotiations for the imports are concluded.

Pequiven plans to import 13,000 tonnes of PVC during the second half of 2011, with 6,000 tonnes to supply the needs of the private sector in Venezuela in the next 4–5 months, sources said. The 7,000 tonne balance is to build inventories.

Private industry sources said Pequiven is currently shipping about 2,000 tonnes/month of PVC for the production of petro-houses and will eventually dedicate all of its production to the project, which will include the manufacture of wall panels, doors, shelves and window and door frames.

Eight plants will be involved in the production of petro-houses, according to government announcements. Three plants are currently operating, two in the city of Guacara and one in the state of Apure, although not at full rates. Five more plants will begin operations in the first half of 2012.

PVC prices in the domestic market have been low since the beginning of the year at $737–750/tonne DEL (delivered), as assessed by ICIS, because of government price controls. Once resin imports arrive, however, prices to the private sector will likely rise to international levels, sources said.

($1 = €0.72)

For more on PVC visit ICIS chemical intelligence

By: Ron Coifman
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