Future remains weak for Latin American PVC markets

HOUSTON (ICIS)–Polyvinyl chloride (PVC) markets in Latin America are expected to remain weak into the near future, driven by various global and regional factors.

PVC prices were heard this week as low as $655/tonne CFR (cost and freight) Pacific coast of South America, and are expected to decline further in February, industry sources in Latin America said on Thursday.

Sources said that PVC demand was soft amid abundant supply in the Americas and other regions.

Declining prices for upstream ethylene and crude oil values bordering on $30/bbl are driving market uncertainty in the Americas and elsewhere.

Regional sources said oil exporting countries in South America are assessing their budgets because of the decrease in income from lower-priced oil.

Colombia’s government sold its majority stake in power generating company Isagen to Canadian investment fund Brookfield Asset Management for $2bn.

Sources in Colombia said that the government plans to use the money to fund infrastructure projects, expanding the country’s highway network to improve economic competitiveness.

In Argentina, newly elected President Mauricio Macri brought government changes that support an improved business environment.

However, market participants note ongoing contentious exchanges between Venezuela President Nicolas Maduro and newly elected opposition members in the country’s National Assembly.

Peru will be holding elections in February 2016, as the current president is term-limited.

Sources said that lower-priced copper, a key export from Chile, continues to dampen sentiment in commercial and industrial sectors of that country.

Brazil’s recession is expected to persist through 2016, according to economists, aggravated by a massive corruption scandal and impeachment proceedings against the country’s president.

Market sources in South America also note weak demand in key consuming countries in other global regions, mainly China and India, which is likely to have an impact in the Americas.

Mexichem and Braskem are PVC producers in Latin America.

Focus article by Ron Coifman