AFPM ’17: US PVC market now questioning price direction

HOUSTON (ICIS)–The US polyvinyl chloride (PVC) market has a simple question to chew on during the International Petrochemical Conference in San Antonio this weekend.

Which way are prices headed?

It seems a pertinent one. After a year and a month of a clear upward trend, spot export prices have begun to slump from the high average of about $920/tonne FOB (free on board) US Gulf reached on 3 March, according to the ICIS assessment.

US monthly contract prices, on the other hand, rose by 4 cents/lb ($88/tonne) for February, and separately announced proposals by suppliers for 3 cents/lb price hikes are on the table for March. Producers have also announced separately proposed increases for another 3 cents/lb for April.

US supply has been deemed tight. But the product sold to traders in the past couple of weeks remains in stock as the buying community in global markets have balked at proposed price increases.

“It’s really hit a stalemate situation, and people are trying to figure out what is going on,” said a trader who works in several global markets.

Recently, a major producer in Asia raised its April offers to China, India and southeast Asia by $20/tonne only to retract the increases within 48 hours when buyers held off.

India was considered one of the stongest markets, with irrigation pipe season looming and the monsoon deadline in June.

The hasty retreat has cast a shadow over the market.

“People are feeling pretty iffy right now,” a producer said last week.

That prompted at least one producer to lower offers to $880/tonne FOB US Gulf late in the week, a backing away of recent efforts to raise prices to $940/tonne FOB US Gulf just two weeks ago.

March and April are heavy with planned outages on plant maintenances. But the evaporation of demand has softened that sentiment to one of closer to balance, for the time being.

Demand in some markets has been challenged. An attempted coup in Turkey last year has disrupted business in that important European and Middle Eastern gateway. A currency float in Egypt has disrupted trade there, and Latin America is spotted with economic problems and resurgent political unrest and uncertainty, at least in Brazil and Argentina and most acutely in Venezuela.

Recently, some market players still held hope of an upturn this week on the expected proposed increases in Asia. But that bubble of optimism may have burst with last week’s downturn.

Major US PVC producers include Shintech, Occidental Chemical, Formosa Plastics and Westlake Chemical.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC continues through Tuesday in San Antonio.

Focus article by Bill Bowen