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Europe PVC sellers want October rollovers, buyers want decreases

ICIS News : 4-Oct-13 23:59

LONDON (ICIS)--A number of European polyvinyl chloride (PVC)  sellers are targeting price rollovers for October contract business, despite the decrease in the upstream October ethylene contract price, and buyers are pushing for price reductions to get compensation for the feedstock relief, market players said on Friday.

INEOS ChlorVinyls and KEMONE  have announced their price rollover initiative with effect from 1 October.

Discussions have just started, but are still in their early stages in most cases.

Sellers said that PVC margins remain low and they need to improve them. They maintain that this can be supported by demand which remains reasonably good for the time of the year.

One manufacturer said it had concluded some October PVC contracts at a rollover –with small volume players, but acknowledged that it was still discussing with its main customers.

A few suppliers, however, did not rule out the possibility of some price softening, depending on starting point. However, one producer said it was not prepared to accept any decrease larger than €10/tonne ($14/tonne).

Buying sources, are looking for price decreases of €10-20/tonne, citing feedstock relief and the expected seasonal downturn in the downstream construction sector during the fourth quarter. They refer to the fact that sellers have improved margins over the last few months. Now, they want to see some of the upstream relief passed on.

A few customers in the Mediterranean said they had concluded some October business with reductions of €15-20/tonne, which they attributed to downstream price pressure on ethylene feedstocks and lacklustre demand in the Mediterranean for economic reasons.

However, there was no seller confirmation of this level of decrease.

Price drops of €20/tonne are slightly larger than the formula-related move in October. For PVC, the formula pass through level equates to around 50% of the ethylene price movement, which translates into a decrease of around €18/tonne (rounded up) for October

One buyer in the UK said it had concluded its PVC October business with decreases of £15/tonne ($24/tonne) – with its price at £845/tonne FD (free delivered) gross, taking into account feedstock relief and the pound sterling/euro exchange rate.

Consumption in northwest Europe continues to hold up reasonably well into early October – with no signs of any seasonal slowdown. The market is described as largely balanced, although a few suppliers maintain that their stocks are tight on the back of good  order intake.

European PVC contract prices in September were assessed at €980-1,020/tonne FD NWE (northwest Europe), €915-1,005/tonne FD Med and £865-895/tonne FD UK. This reflected increases of €25-30/tonne in Europe and £20/tonne in the UK, according to ICIS.

($1 = €0.73, £0.62)

By Heidi Finch
+44 20 8652 3214

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