Price and market trends: US PVC export prices hit 7-month low

28 October 2013 00:00  [Source: ICB]

US polyvinyl chloride (PVC) export prices have fallen to a seven-month low on weak demand and mounting inventories, and further price deterioration is expected in November, market sources said on 18 ­October.

US PVC export cargoes for October are selling for as low as $915/tonne (€677/tonne) FOB (free on board) USG (US Gulf), as assessed by ICIS.

That is the lowest price since export cargoes dipped to $900/tonne on 31 May.

Most US suppliers have fixed all October business and moved on to November discussions. While a limited amount of business for November concluded the week ended 18 October because of holidays in Asia, offers for November are already quoted much lower than October, a trader said.

“Customers are only purchasing the minimum requirements right now because they think the prices will go down in November,” a trader said.

“There were few deals inked for November this week because of holidays in Asia, but discussions have begun and we know of offers as much as $40 lower than the lowest offers heard in October.”

Earlier, October loading US cargoes were offered at $1,000-1,020/tonne CFR (cost and freight) CMP (China Main Port).

November cargoes from the US were offered to China at $960-970/tonne CFR CMP, while bids were $950/tonne, according to buyers and sellers. In the Middle East, US cargoes for November were offered at $980/tonne CFR GCC (Gulf Cooperation Council), a trader said.

In India, US PVC cargoes of up to 2,000 tonnes concluded at $980-990/tonne CFR India.

The price equates to $1,025-1,035/tonne CFR India, as there are additional anti-dumping duties (ADD) of up to $45/tonne in the Indian market.

The India price of $980/tonne CFR India, once freight is subtracted, would take US FOB export prices for November below $900. “Buyers expect prices to fall in November because the US plants will all be operating again by then so there is more supply coming into the market, plus the US suppliers will start working on getting rid of material for end-of-year inventory tax issues,” a trader said.

US PVC plants operated by Shintech and Occidental (OxyChem) have been in planned turnarounds during September and 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.

“Prices will continue to fall this year as demand slips in the winter. PVC demand decreases in the colder months as construction activity is reduced,” a supplier said. Global PVC demand remains low, with weak construction activity in Europe, slower business in Asia and ­relatively weak demand in the US.

US PVC market participants had expected 2013 to be stronger, but have been disappointed with the muted pick up in homebuilding.

“In reality, housing is not that much better this year. It is more flat the last few months. People get excited because they are comparing statistics to the all-time lows in 2009, but overall consumers still are not ready to make big purchases,” a supplier said.

Author: Heather Doyle

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