08 June 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--Spot and export prices in the European polyvinyl chloride (PVC) market have slumped from May on slower demand, rising inventories and lower feedstock ethylene prices, market sources said on Friday.
Although spot prices in the high €700s/tonne were heard among the biggest customers, most deals were done at €800-830/tonne ($1,013-1,051/tonne) FD (free delivered), down by €50/tonne from last week and by €100/tonne since the beginning of May.
According to suppliers, lower spot prices have failed to bring buyers back to the market and forced production cuts.
“Falling prices have not yet triggered a recovery in demand; quite the opposite,” a source said. “The more prices are dropping, the more scared buyers are to order.”
This is likely to continue until buyers feel prices have hit bottom, the source added.
Export prices are down by $170/tonne to $880-910/tonne FOB (free on board) NWE (northwest Europe) because of weak demand and falling prices in the key Turkish market, in which recent deals were concluded at $950/tonne CFR (cost and freight) Turkey, with an approximate freight cost of $60-70/tonne from the west Mediterranean.
There is little expectation of a recovery in the short term, as European domestic market tends to slow down in July and August, while Turkish demand has traditionally weakened during the month-long Ramadan, which this year starts at the end of July.
June contract price negotiations are at an early stage, but decreases of €40-60/tonne from May are widely expected in northwest Europe on weak market fundamentals and lower feedstock costs - the ethylene contract price settled at €1,205/tonne, down by €120/tonne from May.
June contract prices in Spain, which tend to settle earlier in the month, have concluded with an average decrease of €60/tonne.
($1 = €0.79)
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