Europe PVC export prices reach highest point in two years, up by 27% since Q2

LONDON (ICIS)–European polyvinyl chloride (PVC) export spot prices have spiked in the third quarter because of tighter global availability, rising to above domestic spot price levels in the second half of August.

European PVC export prices are now at their highest level for more than two years.

FOB (free on board) export spot prices rose by more than 27% from June to the week beginning 17 August, a far greater increase than the 10% for domestic spot prices during the same time period.

EUROPEAN AVAILABILITY TIGHTNESS
There are a number of planned and unplanned stoppages at European producers, which combined with a resurgence in demand following the second quarter lockdowns have contributed to lower export availability.

KEM ONE is carrying out planned turnarounds at three plants in August and September. Europe’s largest producer INOVYN is also carrying out maintenance shutdowns during September according to market source, although further details could not be confirmed.

Three additional producers are also carrying out planned turnarounds or have suffered production constraints, according to sources. As a result export volumes from Europe are short as producers reserve more material for their domestic markets.

“Our stocks but also industry stocks are down to the levels of 2015, [we] have to look back quite a long time to see such low stocks,” one producer said.

“August [is] normally a month where the market declines. Due to the corona effect a lot of customers decided to shorten breaks,” it added, noting that it has recorded the highest order entry of any August on record.

“The issue in [the] domestic market is that entire market [is] running quite well, but missing imported volumes,” another European producer noted.

Recent Eurostat data on the downstream construction industry showed that June activity continued to rebound after demand cratered in the second quarter, rising by 4% in the Eurozone on top of a 29.4% increase in May, although it remained reduced compared to 2019 levels.

GLOBAL AVAILABILITY TIGHTENS
Global availability has also tightened with an Asian producer declaring force majeure, according to sources, and US PVC volumes falling both in Europe and in mutual export markets.

“Demand [has] picked up not just this part of the world but in India and globally,” one Turkish trader said.

“We were expecting Mexican product to come here, [they] sold everything to Brazil, same from Egypt,” another trader said.

“Russia and Ukraine [have a] significant ethylene problem, prices are very high in dollars,” it added.

TURKISH MARKET REMAINS HIGHLY VOLATILE
Shortly before reaching its highest point for more than two years, European PVC export prices plunged to their lowest point in more than 10 years. Global demand crashed in the second quarter because of lockdowns and other effects of the coronavirus pandemic.

Prices reached a low point at an average of $590/tonne FOB on 8 May.

While prices are significantly on the upswing, the Turkish market in particular is under threat due to the volatility of the lira, combined with shaky underlying demand according to some market sources. Turkey is the largest export market for European PVC.

The lira fell rapidly against the dollar from July to August

“Demand is down step by step in Turkey, the Turkish lira will affect economy activity bringing some limitation,” one trader said.

“[We are] entering the low season of autumn and winter. Demand can be lower than expectations,” it added.

Focus article by Chris Barker

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