FocusLatin American October PVC prices rise on feedstocks

12 October 2012 22:16  [Source: ICIS news]

A PVC pipe sculptureBy Ron Coifman

HOUSTON (ICIS)--Latin American polyvinyl chloride (PVC) prices rose this month on feedstock costs, thin margins and firming trends in other regions, industry participants said.

In most Latin American countries, PVC prices for October were confirmed at higher levels early in the month, but in Brazil, by mid-month participants were negotiating price increases that would likely be accepted at close to the proposed initiatives, according to local sources.

The exception was Venezuela, where resin prices remained steady on government controls.

In several regions of Latin America, however, market talk pointed to weakening prices into November as a result of aggressive resin offers. Market sources projected that demand would soften in December as participants shave inventories toward the end of the year.

Sources in Mexico and Brazil said demand was not meeting earlier expectations.

On the supply side, sources said that US PVC makers had resolved production or logistics issues resulting from Hurricane Isaac, and previously snug supply had eased by mid-October.

Additionally dampening demand, the US housing industry continued a lacklustre recovery. Demand from global export markets for product from the US or Mexico was also down, sources said. The eurozone crisis and weaker activity in China has resulted in decreased demand for PVC from the Americas.

In Argentina, participants said PVC prices increased by $30-50/tonne (€23-39/tonne) for October, following a $30/tonne (€23/tonne) hike in September.

Domestic PVC prices in Argentina for October were at $1,400-1,500/tonne DEL (delivered) for pipe-grade.

Participants noted lacklustre activity, as government restrictions on imports continue to dampen market sentiment.

In Brazil, price increases of 5-8% were being discussed for October, supported by firm resin and feedstock markets in the Americas and other global regions, local sources said. No blanket announcement was heard, as negotiations are carried out on a customer to customer basis.

September PVC prices firmed by an average of 8% on partial success of proposed 12% increases, after a 5% boost in August.

Demand has improved from the first half of 2012, but is still below seasonal expectations, sources said. Infrastructure projects for the 2014 World Cup and 2016 Summer Olympics were proceeding at a slow pace, and were not yet consuming significant PVC volumes.

Supply was in balance with demand, as more domestic material was produced by Braskem’s new PVC plant and complemented with resin imports.

Domestic PVC prices in Brazil in September stood at $1,510-1,690/tonne DEL for pipe-grade.

In Colombia, domestic PVC prices for October rose by $70/tonne for pipe-grade, on support from similar market dynamics throughout the Americas and other global regions, sources said.

In September, domestic PVC prices rose from August by $50/tonne for pipe grade and $20/tonne for general purpose,

Colombian PVC for October exports was being quoted at $1,120-1,140/tonne CFR (cost and freight) South America except for Brazil and at $1,160-1,180/tonne CFR Brazil, up from September offers at $1,080-1,100/tonne CFR South America including Brazil. July prices were at $980-1,000/tonne CFR South America except Brazil and $1,060-1,080/tonne CFR Brazil.

In Mexico, PVC domestic prices increased by 4 cents/lb in October, on upward pressure from US imports, sources said.

Resin supply has eased, sources said, suggesting that increasing availability could result in weakening prices into November. Demand is expected to decline as participants destock toward year-end, placing downward pressure on PVC prices.

Mexican export material for October is being quoted at $1,060-1,080/tonne CFR South America, India and Turkey, up from September exports at $1,010-1,030/tonne CFR Europe/Turkey/Asia in September and $860-880/tonne CFR Europe/Turkey/Asia/South America in July.

In Venezuela, the population was focused on impact of the presidential elections of 7 October. However, industry participants said PVC demand was steady despite an uncertain outlook on the economy.

Market sources said that PVC availability for private industry in Venezuela, as well as for public construction projects, was ample because of the arrival of resin imports from Colombia and the US in the past few months.

PVC prices offered to private industry are assessed as stable, with the mix unchanged at 25% imported resin to 75% domestic  for pipe-grade, and 80% imported to 20% domestic for general purpose (GP).

Venezuela producer Pequiven’s prices for imported resin stood at $1,609/tonne DEL for pipe grade and GP, and domestic resin at $737/tonne DEL for pipe grade and $788/tonne DEL for GP.

On the Pacific coast of South America, the lowest PVC quotes were heard at $1,020-1,050/tonne CFR Pacific coast of South America for pipe-grade, offered by a major US producer through the end of the year, regional sources said.

Supply in the region was ample amid steady demand, sources said.

PVC producers in Latin America are Braskem, Solvay and Mexichem.

($1 = €0.77)

By: Ron Coifman
+1 713 525 2653

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