US PVC export price falls below $900, not bottomed yet: sources

25 October 2013 21:11  [Source: ICIS news]

HOUSTON (ICIS)--US polyvinyl chloride (PVC) export prices fell below $900/tonne (648) FOB (free on board) US Gulf, but some US market participants said on Friday that the bottom has not been reached yet.

US PVC export prices were selling for up to $970/tonne FOB US Gulf in September but have fallen to $895/tonne this week, as assessed by ICIS.

US PVC producers have benefited from cheaper ethylene, made using competitively priced ethane from shale gas, and have been relying on exports. But US PVC export growth, while healthy, has slowed.

US material has been offered to Asia, the Middle East and South America at lower prices this week, but buyers are still taking a wait-and-see approach, expecting prices to fall further in November.

In the Gulf Cooperation Council (GCC) markets, US cargoes for November loading were offered from $970-980/tonne CFR (cost and freight) GCC, market participants confirmed.

However, deals concluded were limited because converters said they expected a further decline in the following weeks and chose to take a wait-and-see stance.

Selling indications of US cargoes in the Eastern Mediterranean were $980-1,000/tonne CFR, according to traders.

In Turkey, US offers for cargoes loading in November fell to $950-960/tonne CFR Turkey, down by $20-30/tonne from the previous month, a trader said.

Deals were concluded by converters for these US cargoes. However, several traders stayed away from the offers, in expectations of further price declines.

Freight from the US to Asia would be about $80-100 reflecting an FOB US Gulf price below $900, a trader said.

One of the key indicators of global PVC market has been the official offer prices in Asia.

Formosa Taiwan lowered its November official offer price by $40/tonne from October, but later when interest was not there, dropped the price further in the Indian market to $70/tonne lower from October,  a trader said.

“If the US suppliers drop their November offers as much, the price would fall below $850/tonne FOB US Gulf,” a trader said. “But we don’t even think that is far enough because customers expect the price to drop farther and then bottom in December. Buyer ideas are already below $850/tonne.”

The winter season means reduced demand for PVC spot cargoes as construction activities slow down, so I can see prices falling more next month, a PVC buyer said.

“Prices for PVC have come down, but the atmosphere is that the bottom is close,” a supplier said.

($1 = €0.72)

Author: Heather Doyle

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