Europe August PVC contract prices rise €70-75/tonne

31 August 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--August contract price negotiations in the European polyvinyl chloride (PVC) market have settled with average increases of €75/tonne ($94/tonne) in northwest Europe, €70/tonne in the Mediterranean, and £60/tonne ($95/tonne) in the UK, producers and buyers said on Friday.

Despite the summer holiday dip, restricted supply at some European manufacturing sites and low downstream inventories have helped producers pass on the full additional cost of the August upstream ethylene contract – up by €140/tonne from July – to downstream customers, with some gains made in northwest Europe and the UK.

According to market players, the approaching summer holiday season and pessimistic sentiment in the upstream ethylene market in the second quarter led customers to reduce inventories.

The trend reversed at the end of July and has continued until now, with some restocking activity, driven by low stocks and optimistic upstream sentiment, offsetting the seasonally slow August demand.

Looking ahead, major producer INEOS ChlorVinyls has announced a target increase for suspension PVC grades of €170/tonne with effect from 1 September or as contracts allow.

Other producers said they were targeting an increase for September PVC contract prices beyond the feedstock cost rise – the ethylene contract price for September has been agreed at €1,300/tonne, up by €125/tonne from August – to improve PVC margins.

However, there were no further price announcements so far.

“The whole industry is at an unsustainable level of margins,” a producer said. “September volumes should support these increases”.

($1 = €0.80, $1 = £0.63)

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By: Abache Abreu
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