LONDON (ICIS)--European polyvinyl chloride (PVC) contract price ideas for November are stable to softer, as some sellers’ attempts to retain margins are being weighed against strong resistance from buyers amid lower feedstock costs and competitive offers from other sellers, said market players on Friday.
INEOS ChlorVinyls and KEM ONE have officially announced their plans to roll over their PVC suspension (pipe grade) prices in November.
A third manufacturer said it also wanted to keep its PVC prices steady, despite the ethylene cost relief in November in order to benefit from a margin perspective. The same source, however, acknowledged that price stability would be difficult and said that it was prepared to accept reductions of €10/tonne ($14/tonne), but would resist anything more.
Another supplier said it had offered price decreases of €15/tonne in November and had already concluded some business at this level. The €15/tonne reduction is in line with the pass through level of ethylene into PVC, which equates to around 50% of the €30/tonne price reduction in the November ethylene contract price.
Some buyers in northwest Europe and the UK said they would look for price reductions of €15/tonne and £15/tonne respectively in line with the formula pass through and one customer said it would push for a larger drop amid slowing demand and good availability.
One customer in the UK said it is discussing price decreases of £10-15/tonne, stating that it was facing quite a lot of seller resistance to reductions of £15/tonne, which it attributed to feedstock relief being weighed against the euro/pound sterling exchange rate.
The same source said it would look to postpone settling its November contract business for as long as possible, stating that it wanted to see if the weather would deteriorate during November which is likely limit downstream construction activity. Construction demand is highly dependent on weather conditions.
Demand in the main downstream construction sector remains reasonable for the time of year. This has been supported by mild winter weather up until now. However, sources acknowledge that as soon as freezing conditions occur, demand is likely to slow down as a result.
The PVC market is largely well-supplied. One seller, however, said it has exported some product to balance out its system. There are some reports supply could lengthen once the seasonal drop in demand materialises, although this is likely to be mitigated to some extent by upstream chlorine output cuts or PVC export activity.
European polyvinyl chloride contract prices in October were assessed down by €15-20/tonne in Europe –with values at €965-1,000/tonne FD (free delivered) NWE (northwest Europe) and €900-985/tonne FD Mediterranean (MED). In the UK, prices moved down by £15/tonne, with values at £850-880/tonne FD.
($1 = €0.74)