Coronavirus spreads fear in Europe’s chlorvinyls and chloralkalis markets

LONDON (ICIS)–The deadly coronavirus currently ravaging China has already spread fear and disruption throughout Europe’s chloralkalis and chlorvinyls markets.

Market sources are worried that disruptions to trade and manufacturing could result in a reduction in caustic soda production, and have a knock-on effect for polyvinyl chloride (PVC) and other products.

“Due to the coronavirus, the [caustic soda] market can globally change… as China closes plants,” one trader said.

“Qatar will go to Australia and Oceania, Iran will try, but due to vessel problems, I have doubts. USA will do also to that region,” it added.

“In this case, less material in the Mediterranean, northwest Europe will go to [the] Mediterranean maybe, but the total balance will change.”

The trader also noted that it expects caustic soda prices to increase by the end of February due to the tighter market.

For PVC, the opposite may be true – with market players concerned that China will no longer be able to absorb its normal share.

“China’s [manufacturing sector has] stopped at the moment because of the coronavirus. Some product was supposed to go there, [so this will] change the destination of some product,” a PVC trader said.

“[The] Chinese market is very important to all producers around the world. If the Chinese market is not absorbing some part of what it is supposed to absorb… we would find some increase of PVC [prices],” it added.

One caustic soda source said: “A colleague in Hong Kong told me they were [working in] a home office, but a factory worker cannot work from home,” it added.

The source was also concerned about the possibility that shipments from China would be contaminated, for example on the surface of a pallet or in paperwork.

According to the latest news reports, countries such as Indonesia are considering import restrictions on Chinese products because of concerns about the coronavirus. Businesses including Apple have also temporarily closed offices in the country.

The coronavirus has also limited Chinese export activity for products such as methylene chloride (MEC), which has recently tightened in the global market as export supply has dwindled.

The virus has a fatality rate of approximately two percent, according to reports, although sources say that many Chinese believe the figure is significantly higher than that. At present, the vast majority of suspected cases have been confined to China.

“We carry out a lot of business with China, and Chinese people are really afraid,” one distributor said.

(Clarification: recasts, clarifying quote in 10th paragraph)

Focus article by Chris Barker

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