Despite gains in spot ethylene and VCM, US PVC offers fail to move higher in global markets

26-Mar-10
In testimony to the poor demand for PVC due to weak economic conditions (PVC is highly correlated to GDP growth), US PVC prices have failed to find get boosted by higher input costs in the country, as per Chemorbis. Despite an approximate gain of US$600/ton in spot ethylene prices in the US since the beginning of 2010 and a US$150/ton rise in spot VCM export offers, US PVC offers have failed to move higher in global markets. In the Chinese market, US PVC k67 offers in January were at US$960-1000/ton CFR, cash basis. The range gained some small ground in February to US$980-1010/ton, and offers reported in March are within the February range at US$990-1000/ton while the latest offer for the month of April is reported at US$990/ton as PVC business to China is set to rollover for next month. One trader who reported reducing his prices by ten dollars for April cargoes commented, “The demand from the downstream side is still not good, so we are holding a cautious view on PVC business over the near term.” In Turkey, US PVC k67 offers started out under $1000/ton in the first two weeks of 2010, but by mid-Jan offers started at the low end at US$1000/ton and reached US$1030/ton on the high end based on CFR Turkey, cash. Egypt saw a similar pattern with prices all starting at US$1000/ton by the second week of January with the range reported at US$1000-1050/ton CIF Egypt, 180 days deferred payment. The range was unchanged in February at US$1000-1050/ton with the month of March seeing slightly higher offers by around US$20-25/ton compared to February at US$1025-1070/ton. However, a done deal reported this week at US$1040/ton is still within the February range. Sellers to the Egyptian market have mostly talked of the higher US costs affecting PVC prices, but buyers note that potential increases have been kept in check by the local producer’s lower prices and discounts for large purchases. A few buyers, on the other hand, say they are about ready to take an import position in order to take advantage of the better payment terms on imports and since demand should pick up in the month ahead.
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