Europe PVC market subdued, soft expectations for August

19 August 2016 12:34 Source:ICIS News

PVC pipeLONDON (ICIS)--The European polyvinyl chloride (PVC) contract market is subdued because of the ongoing holiday season, with early expectations for August prices being for decreases, according to sources on Friday.

The August decreases would be in line with or larger than the cost decrease from feedstock ethylene.

August is typically a subdued month in Europe because of lower activity in the downstream construction industry, with many players from both the buying and selling sides also away during this period.

As a result, demand has seen a typical seasonal dip. 

European PVC prices in July stood at €1,095-1,120/tonne FD (free delivered) NWE (northwest Europe) for pipe grade, while the same grade in the Mediterranean was assessed at €1,040-1,085/tonne FD Med.

In the UK, PVC pipe grade prices were assessed at £910-969/tonne FD UK, increase of £25/tonne on the low end and £50/tonne on the high end compared to June.

PVC availability in Europe could also be tightened by reported shutdowns, with the Borsodchem planned maintenance at Kazincbarcika coming to an end earlier this week according to market sources, although this could not be immediately confirmed at the producer.

In addition, the feedstock ethylene contract price fell by €20/tonne for the month with PVC typically seeing a cost pass through of approximately 50% of the price delta.

Early expectations from the producers' side of the market tended towards reductions following the cost decrease for ethylene, putting them at around €10/tonne.

"Expectation for prices are in line with ethylene. [Demand is] below average but seasonal... [The] environment is fairly positive [with] upward potential in September in Asia/India and the Far East," one producer said.

Buyers, on the other hand, expected that somewhat larger price decreases could be passed through in the range of €10-20/tonne, due to the low level of seasonal demand.

"I think the demand is more or less on the low level for August. France-Spain and Italy have three weeks holiday," one buyer noted.

In the UK, prices are expected to be firmer for some buyers due to the phased introduction of price increases to match the depreciation of the pound which began in July.

The majority of price discussions are still open and are expected to be concluded later in the month.

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By Chris Barker