Although January is generally a slow month for PVC demand in the Northern Hemisphere, PVC prices in Asia and the US have seen significant increases this month with sellers generally predicting that prices will continue to firm up, as per Chemorbis. Prices in both regions have been aided by comparatively good demand in Asia, where converters are building stocks ahead of the Chinese Lunar holidays in mid-February, along with rising costs of feedstock ethylene and VCM that have kept PVC producers under pressure to work for higher prices to cover operating costs.
In Asia, spot ethylene prices have spiked about US$100/ton on a week-over-week basis to be reported at around $1350/ton CFR Northeast Asia, on limited availability in Asia and in the Middle East, coupled with healthy buying interest from Asia’s PE producers. Finding support from stronger ethylene costs and from higher February nominations for PVC to China, Japanese producers have announced their initial February VCM offers at US$850-860/ton CFR China, about US$80-90/ton above the January done deal level. Taking these increases in feedstock costs into account, Asian producers would need to achieve deals for February at US$1000-1010/ton CFR China in order to cover their costs, assuming that VCM producers obtain the full extent of their price hike targets. Initial February offers for PVC were announced last week at US$1020-1050/ton CFR China, an increase of US$80-90/ton from the January done deal level. Although domestic PVC prices in China lost some ground on the first trading day of the week, several Chinese producers announced additional price hikes of US$20-30/ton on their export offers due to firming sentiment in the region’s import markets.
In the US, spot PVC prices have also received a boost from healthier demand in Asia and stronger feedstock markets. Spot ethylene prices in the US gained around US$10-65/ton over the past week, with deals being reported in the range of US$970-980/ton FD USG. Although the market lost some ground towards the end of the week due to softening ethane feedstock prices, sources nevertheless commented that the outlook remained firm for February. Higher ethylene prices lent support to US VCM offers, which were reported notionally firmer by ten dollars on the high end at US$590-615/ton FOB USG last week, with some sellers speculating that the next done deal prices may move as high as US$625/ton. Tracking these developments in feedstock markets, several producers nominated their February contracts with increases of US$110/ton on top of the US$110/ton increases producers are already seeking for January.
Buyers have expressed skepticism of the ability of producers to secure two months of triple digit price increases during the winter, although most expect producers to achieve at least some increases in both months. As demand in the US is said to be unspectacular these days, most sellers are focusing on their export business, which several claim is doing well for February, mainly on good demand from the Asian market. Sellers added that they are feeling bullish regarding their export business for March delivery, predicting that the low end of the February offer levels would be likely to disappear for the March round of business.