18 February 2013 06:36 [Source: ICIS news]
By Veena Pathare
SINGAPORE (ICIS)--Spot polyvinyl chloride (PVC) prices in the Gulf Cooperation Council (GCC) markets look set to continue rising, as US imports are dwindling following a force majeure declaration by Westlake Chemical since last week , industry sources said on Monday.
On 15 February, spot PVC prices in the GCC region were assessed at $1,060-1,090/tonne (€795-818/tonne) CFR (cost and freight) GCC, up by $10-20/tonne from previous week, according to ICIS data.
The region procures about half of its monthly PVC requirement of 35,000-40,000 tonnes from the US.
US sellers have been quoting higher offers because of tight supply in the domestic market, but further price gains in the GCC markets will likely be tempered by imports of Asian cargoes, which are priced about $50/tonne lower than US material, industry sources said.
Asia accounts for a quarter of GCC’s PVC import requirement. The remaining 25% of GCC’s PVC demand is covered by regional production.
Expectations of higher prices towards March will see strong buying activities in the Middle Eastern PVC markets in the coming weeks, market sources said.
Early in the month, GCC-based converters did not actively seek February lots as they were holding ample PVC inventory from purchases made in December 2012, market sources said.
“Although converters hold adequate inventories in February, the likelihood of a price increase for March may lead to an artificial demand situation, with many converters scurrying for end-February shipments,” a UAE-based trader said.
A $40-50/tonne price increase is likely for March cargoes, the trader said.
Converters were heard to be considering to start discussions for end-February-loading cargoes, market sources said.
“I haven’t looked to source anything in February. But with supply expected to tighten further, we could look to source some cargoes for February,” an Oman-based converter said.
US producers have been hiking spot offers to the GCC for February-loading shipments given limited availability of product for export following the force majeure declaration by major domestic producer Westlake Chemical, as well as turnarounds at some other domestic facilities, amid an expected recovery of demand from the housing sector.
Price quotes in the Middle East for February lots of US origin were about $100/tonne higher compared with December 2012 levels, market sources said.
Major US PVC producers include Westlake Chemical, PPG Industries, Occidental Chemical, Formosa Plastics, Shintech and Georgia Gulf.
($1 = €0.75)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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