Partial implementation expected on Sept PVC hike proposed in Brazil

05 September 2013 22:26  [Source: ICIS news]

HOUSTON (ICIS)--A 10% price hike for September polyvinyl chloride (PVC) has been proposed in Brazil, but industry participants expect that negotiations will probably conclude at a 6-7% increase, sources said on Thursday.

The initiative in Brazil is supported by the devaluation of the real against the US dollar, firmer crude oil futures prices, the uptrend in Asian PVC prices and an expected reduction in PVC availability in the US, according to local sources. Resin supply is projected to tighten because of upcoming PVC plant turnarounds in the US and Asia amid rising demand for PVC in the US as the economy improves, sources said.

However, sources also noted that Indonesia and India have reduced imports, leaving more material available in the US and leading to downward pressure on prices in the Americas.

A conclusion to the discussions is not expected before mid-September, as negotiations are on a customer-by-customer basis, with no blanket implementation for the industry.

PVC and chlor-alkali plants in Brazil are operating normally at close to full rates after the five-hour energy blackout that occurred on Wednesday 28 August in eight states of northeast Brazil, industry participants said.

Demand for PVC is up in the second half of 2013 compared with the first half.

However, demand was better than expected in the first half of the year. Some of the earlier purchases went to raise inventories, which are now being consumed, potentially dampening demand during the second half.

Also contributing to softening demand, resin purchases are expected to decline toward the end of the year on destocking to reduce tax exposure, sources said.

Domestic prices for pipe-grade PVC in Brazil are assessed at $2,000-2,200/tonne (€1,520-1,672/tonne) DEL (delivered) before any increase for September.

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

($1 = €0.76)


By: Ron Coifman
+1 713 525 2653



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