Price and market trends: Latin America PVC prices expected to weaken

26 October 2012 09:03  [Source: ICB]

Latin American polyvinyl chloride (PVC) prices rose in October on feedstock costs, thin margins and firming trends in other regions, but market talk points to weakening prices in November.

In most Latin American countries, PVC prices for October were confirmed at higher levels at the beginning of the month, and in Brazil, participants concluded price-increase negotiations by mid-month. The exception is Venezuela, where resin prices remain steady on government controls.

Brazil world cup Rex Features

 Rex Features

Construction for the 2014 World Cup has yet to affect Brazil PVC

In several regions of Latin America, however, market talk points to weakening prices into November, because aggressive resin offers are being heard. Market sources are projecting that demand will soften in December, as participants shave inventories toward the end of the year.

Sources in Mexico and Brazil said current soft demand does not meet earlier expectations. On the supply side, sources said US PVC makers had resolved Hurricane Isaac-related production or logistics issues and previously snug supply had eased by mid-October.

Additionally dampening demand, the housing industry in the US continues to suffer from the lame 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 prices rose by $30-50/tonne for October, following the $30/tonne (€23/tonne) hike in September.

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

In Argentina, domestic pipe-grade prices were assessed at $1,400-1,550/tonne on 19 October.

RISES IN BRAZIL

In Brazil, October prices settled at an average increase of 6% from September, following discussions that began at 5-8%, supported by firm resin and feedstock markets in the Americas and other global regions, according to local sources. No blanket announcement was heard, as negotiations in Brazil are carried out on a customer-to-customer basis.

September 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 are proceeding at a slow pace, and are not yet consuming significant PVC volumes.

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

In Brazil, domestic pipe-grade PVC prices were assessed at $1,600-1,790/tonne on 19 October.

COLOMBIAN INCREASES

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

Colombian PVC for October exports is being quoted at $1,120-1,140/tonne CFR South America except 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.

MEXICAN MOVEMENTS

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

LATAM PVCResin supply has loosened, sources said, suggesting that increasing availability could result in weakening prices into November. Demand is expected to decline as participants destock ­towards year-end, placing downward pressure on 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 is focused on the impact of the presidential elections of 7 October which saw president Hugo Chavez win re-election. Industry participants said PVC demand had slowed on an uncertain economic and political outlook.

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

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).

Pequiven's imported resin is at $1,609/tonne DEL for pipe grade and GP, and domestic resin is at $737/tonne DEL for pipe grade and $788/tonne DEL for GP.


By: Ron Coifman
+1 713 525 2653



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