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Vinyl Chloride Monomer Overview Transcript
Vinyl chloride monomer, also known as VCM, is an intermediate in polyvinyl chloride (PVC) production and is largely integrated, with only a small merchant market outside of contract agreements.
About 99% of VCM is used in the production of downstream PVC, which is the main driver of VCM prices.
Other drivers include movements in ethylene and chlorine costs as well as events in the wider chlor alkali chain, as producers need to balance the electro chemical unit in order to make the business profitable.
The economy is also a key driver for VCM consumption, as the PVC market is strongly linked with construction activity and GDP.
In the global VCM market, trading activity has depended on the outcome of PVC negotiations, which have been largely unsuccessful for producers, as poor conditions in the construction market continue to cap potential increases and producers’ efforts to pass higher ethylene costs.
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Updated to Q3 2016
VCM prices continued to closely track the prices of sole derivative polyvinyl chloride (PVC), with the VCM-PVC spread fluctuating within a range of $157.50-205/tonne in northeast Asia, and $150-192.50/tonne in southeast Asia.
Spot demand in northeast Asia was generally better in Q3, compared to the first two quarters of 2016. This was due to surging PVC prices in the domestic Chinese market, resulting in Chinese VCM buyers willing to purchase more VCM imports.
Spot VCM supply in northeast and southeast Asia remained tight throughout Q3. Taiwanese and Chinese producers did not offer any spot volumes due to turnarounds and lower operating rates. Similarly, there were fewer volumes offered from Japan and South Korea due to turnarounds.
VCM prices fell from $640/tonne CFR SE Asia and $625/tonne CFR NE Asia to $607.50/tonne CFR SE Asia and $580/tonne CFR NE Asia in June. For the rest of Q3, VCM prices surged to $707.50/tonne CFR SE Asia and $717.50/tonne CFR NE Asia
Updated to Q3 2016
European vinyl chloride monomer (VCM) spot price trends have been variable in Q3 as a result of upstream and downstream price movements.
European VCM capacity is mostly integrated into polyvinyl chloride (PVC) production systems, meaning that spot sales are extremely rare. In the case of unexpected feedstock shortages, most producers prefer to use EDC due to its lower transportation costs.
PVC prices were stable-to-soft in Q3 as a result of somewhat low demand due to seasonal factors, while feedstock ethylene prices rose in July but were stable-to-soft in the following two months.
In general, the VCM price trend followed that of ethylene (rising in July, falling in August, flat in September), but with some mitigation by the PVC price trends, which moved by less than ethylene prices in July and August.
Updated to Q3 2016
US vinyl chloride monomer (VCM) prices continued to track the price changes for derivative polyvinyl chloride (PVC) during the quarter, rising by an average of $30/tonne during the period.
US VCM trade is difficult to track, since most is consumed internally by backward-integrated PVC producers.
But US VCM exports of 662,282 tonnes through July are 4% ahead of their 2015 volumes as the US became a supplier for a major PVC producer in Mexico after a plant explosion there in the early part of the second quarter.
Export volumes of 322,070 tonnes to Mexico through the first seven months of the year are up 15% from the same period last year; volumes of 212,475 tonnes to Colombia during the period are up 8%; and shipments of 127,244 tonnes to Canada are up 26%, according to ITC data.
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