The PVC market in the US has been facing several production issues since late last year, which have been exacerbated recently by the force majeure declaration of Westlake, as per ChemOrbis. Tightening supplies in the US have been resulting in higher domestic prices as well as firming export prices out of the country. This situation, needless to say, continues to render the global PVC sentiment firm as the US is a crucial supplier for several spot markets.
Around the end of December 2012, PPG declared a force majeure on its VCM supplies from its 552,000 tpa plant in Louisiana. This news caused VCM costs to jump higher while the planned production shutdowns for the first quarter of 2013 also created concerns about tightening PVC supplies in the country, urging domestic PVC suppliers to seek 3 cents/lb (US$66/ton) hikes for February and 5 cents/lb (US$110/ton) for March. Formosa was heard to be planning a shutdown at its 575,000 tpa PVC plant in Point Comfort, Louisiana by late February for three weeks while the company is expected to finish the turnaround at its 790,000 tpa PVC plant in Baton Rouge, Texas in early March. Shintec is scheduled to have a three week maintenance shutdown at its Freeport, Texas plant in late February while Georgia Gulf and Axiall are also set to shut their PVC plants in Plaquemine, Louisiana for two to three weeks in March. On top of these slated turnarounds, Westlake declared force majeure on output from its 300,000 tpa PVC plant in Geismar, Louisiana on Feb 13 due to equipment failures related to its VCM unit. In North America, the force majeure announced by Mexico’s Mexichem has been in place since January 4 due to the VCM shortage at its supplier, PPG.
These production issues in the US have been gradually pushing export prices higher from the country. Since late December, import US PVC k67 offers have posted a cumulative increase of US$90/ton in Egypt, US$70-100/ton in China and US$50/ton in Turkey. The US is the largest PVC supplier for these three countries. Therefore, even though the sentiment remains poor in the local markets for the countries in question, rising US offers continue to keep the market outlook firm. "We expect to see firmer PVC prices from import suppliers after the holidays. Demand is not very encouraging but stronger upstream costs and limited availability will support sellers’ price hike attempts," a Chinese trader based in Xiamen reported.
In Egypt, a converter told ChemOrbis, “Overall demand is weak amidst liquidity issues, which caused local prices to soften. However, import offers are still firming up. Regarding the future direction of the market, we expect the firm trend to remain in place.” Likewise in Turkey, a trader who is having a hard time in concluding deals lamented, “The increase on US PVC offers are right in line with the export offers from the country but this doesn’t mean that their higher offer levels are finding acceptance in the Turkish market.” If it wasn’t for the global upturn, PVC prices would have already moved lower in Turkey due to poor demand, opine some sources, since quite competitive prices were reported to have passed in deals in the local market.