US PVC export prices falling, expected to soften further

27 September 2013 20:45  [Source: ICIS news]

HOUSTON (ICIS)--US polyvinyl (PVC) export prices widened this week as suppliers worked to sell the remaining cargoes for October shipment, while November offers are expected to decrease from recent levels, market participants said on Friday.

US suppliers started the week targeting higher offers for October-loading PVC cargoes because of limited availability, a result of planned turnarounds.

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

The OxyChem plant in Deer Park, Texas, produces an estimated 310,000 tonnes/year of PVC, while the Shintech facility in Plaquemine, Louisiana, produces 600,000/tonnes/year. The combined production of these two facilities represents an estimated 11% of total US and Mexico PVC production.

Bids for October shipping fell as sellers tried to maintain higher offers.

“Converters are trying to hold back purchasing, because many in the market expect a downtrend in prices in the following weeks,” a trader said.

While sellers marginally reduced their price towards the end of the week because of reduced demand, they were reluctant to reduce their offers further because of limited availability, a result of planned turnarounds in US and Asia.

US PVC loading in October was offered at $1,060/tonne (€784/tonne) CFR (cost and freight) Gulf Corporation Council (GCC) early in the week, and fell by $10/tonne to $1,050/tonne CFR later in the week.

Nevertheless, bids in the GCC region were capped at $1,020/tonne, leaving a $30-40/tonne buy-sell price idea gap.

At least one cargo was sold at $1,020/tonne CFR GCC, a trader said, but market participants thought of this as a one-off deal.

US offers into China started the week at $1,010/tonne CFR China Main Port (CMP), while buy side ideas were at $980-990/tonne. A deal finished at the end of the week at $1,000/tonne CFR, a trader confirmed.

The majority of the export offers from the US were from traders, as many US suppliers said they had finished October business.

Globally, PVC demand has been weak in every region all year. As the end of the year approaches, Asia buyers expect an influx of cargoes to come into their region when US suppliers try to clear their inventories at the end of the year for tax reasons.

“US prices have dropped about $10-20/tonne this week from last week. There are signs pointing toward further weakness next month,” a supplier said.

The deals discussed this week for November could put the US export range around $920-970 FOB (free on board) USG (US Gulf), a trader said.

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

Major US producers of PVC include Axiall, OxyChem, Formosa, Shintech and Westlake.

($1 = €0.74)

By: Heather McGuire Doyle
+1 713 525 2653

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