Venezuela may export PVC due to weak domestic demand

Government-owned Pequiven has been making extra efforts to offer resin directly to consumers, while construction activity is practically halted because of the country’s ailing economy. Above, a woman organises groceries in Caracas, Venezuela. (Agencia EFE/REX/Shutterstock)

Focus article by Ron Coifman

HOUSTON (ICIS)–Government-owned Pequiven, Venezuela’s sole polyvinyl chloride (PVC) producer, is considering exporting resin because domestic demand is so weak and inventories continue rising.

Local sources said on Friday that the domestic PVC producer has been making extra efforts to offer resin directly to consumers amid fragile demand, while construction activity is practically halted because of the country’s ailing economy.

Sources said that PVC supply currently exceeds demand, when only a few months ago, PVC consumers could not obtain sufficient resin to meet their requirements.

Venezuela’s PVC prices in bolivares (Bs) remain unchanged on support from government controls, according to commentary from industry participants.

PVC prices are at Bs600,000/tonne to include shipment and other expenses to place the product at resin processors’ plants. Prices in US dollars, however, vary in line with currency exchange rate fluctuations.

With Friday’s Dicom (Divisa Complementaria) rate applied to industrial products at Bs659/US dollar, PVC prices are assessed at $910/tonne.

Venezuelans continue to be focused on the recall referendum against President Nicolas Maduro.

On Thursday night, the National Electoral Council of Venezuela suspended the recall referendum until 2017. The opposition continues to push for the referendum this year, which would result in a new presidential election should Maduro be recalled. If he is recalled in 2017, his vice president would fill the vacancy.

Political and economic conditions are precarious amid attacks on food trucks, supermarkets and warehouses because of critical shortages of food, sources said.

The population is dedicating more resources and time to obtaining scarce food and indispensable toiletries, sources said. Demand for PVC, downstream products and non-essential items in general, remains weak, as the general public struggles to obtain scarce food, medicines, and personal care and household hygiene products.

However, the government recently started to import basic foods – sugar, flour, milk – and household items such as toilet paper from Colombia and Brazil, local sources said.

The government sells the imported products in popular markets in Venezuela at high prices corresponding to the parallel currency exchange rate of Bs1,205/US dollar, the sources said. However, scarce goods produced in Venezuela continue to be regulated and are offered at low, government-controlled prices.

Several currency exchanges, the lack of foreign currency to pay for imports and the strong devaluation of the parallel-market currency continue to distort the country’s troubled economy.

SMALL IMAGE: Venezuelan President Nicolas Maduro in 2015. (Xinhua News Agency/REX Shutterstock)

INSET IMAGE: Venezuela currency kept in a cash register. (Agencia EFE/REX/Shutterstock)