FocusBuy-sell price ideas gap could slow down US PVC exports

20 September 2013 23:01  [Source: ICIS news]

Buy-sell price ideas gap could slow down US PVC exports

By Heather McGuire Doyle

HOUSTON (ICIS)--Despite the much-discussed tight supply in the region, US Gulf suppliers are offering polyvinyl chloride (PVC) to Latin America, the Middle East, the Gulf Cooperation Council (GCC), Africa and Asia, but a wide gap in buy-sell price ideas is limiting transactions, traders said on Friday.

US producers are targeting higher offers for October-loading cargoes because of limited availability following scheduled turnarounds,” a supplier said.

US PVC plants operated by Shintech and Occidental (OxyChem) are expected to be in planned turnarounds during September/October, the supplier added.

US offers to China were less frequent than normal this week because of tight supply, but still heard at $1,010/tonne (€747/tonne) CFR (cost and freight) CMP (China Main Port), a trader confirmed.

In the Gulf Cooperation Council (GCC) markets, US cargoes for end-September loading were heard at $1,050-1,060/tonne CFR GCC and October loading was heard at $1,060/tonne CFR GCC.

US offers were met with little interest, as market participants thought the prices could be too high. They may wait for major Taiwanese producer, Formosa Plastics Corp (FPC), to release its official price announcement for October-loading cargoes before making their next move. FPC is expected to make its official price announcement in the coming week.

US PVC cargoes loading in October offered at $1,030/tonne CFR Turkey received limited response because of the additional anti-dumping duties of $45/tonne and 6.5% import duties.

Buying ideas for US cargoes to Turkey were capped at $1,000-1,010/tonne CFR.

“The CFR numbers are far too low and can’t offer a reasonable netback for FOB US Gulf right now,” a supplier said.

Export offers have slipped to as low as $1,000/tonne CFR destination port, which could equate to around a $920/tonne FOB US Gulf price, a trader said.

FOB US Gulf export prices last traded in a range of $950-970/tonne, as assessed by ICIS.

“Offers are higher from the US because of tight supply, but buyers are taking very little product at these offer prices and demand is weak so that is keeping the market in balance,” a trader said. “I think export prices will come down quick because of this huge gap in buyer/seller price ideas.”

Another PVC supplier thinks that export activity could improve from the US as a result of recently improved currency values.

“The recent strengthening of the Indian rupee against the US dollar as well as currency improvements in Russia, Brazil and Mexico would likely help improve demand and make US offers look attractive again in October,” a supplier said.

Meanwhile, PVC demand remains low, with weak construction activity in Europe, slower business in Asia and relatively weak demand in the US.

“The US PVC market is tight now and will stay tight for several weeks, and I believe that tight supply will override weak demand. Prices are flat this week because of a lack of buying, but spot values will etch up in October,” a supplier said.

Major US producers of PVC include Axiall, Occidental Chemical (OxyChem), Formosa, Shintech and Westlake.

($1 = €0.74)


By: Heather McGuire Doyle
+1 713 525 2653

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