Sluggishness in PVC demand across the globe

19-Mar-10
Global PVC markets are witnessing lackluster demand. Sluggishness in PVC demand since the beginning of 2010 has been seen in the Mediterranean, while markets of Turkey and Egypt have been so slow that they have remained indifferent to March increases in Asia, as per Chemorbis. Lack of interest for imports has resulted in very few Asian PVC cargoes into Egypt in the past couple of months, while existing Asian offers in the Turkey have continued to trade below comparative levels of deal conclusion in China for March as traders are unable to up adjust their offers due to lack support from demand. In Turkey, buyers have preferred the more attractively priced domestic material for their limited requirements. Meanwhile, European cargoes have been popular in the import market, providing a competitive edge against other sources. Likewise, Egyptian buyers prefer to meet their urgent needs from the local market with very little interest seen for imports. Egypt’s domestic producer has rolled over prices mid-March due to slow demand. Upward momentum in Turkey and Egypt is unlikely until local supplies are exhausted and demand shows a satisfactory rebound. Demand in Europe has not been brilliant either. Although there was a slight revival in market activity in Italy during late January and early February in line with the rising price trend, demand overall in the region has suffered from the poor economic conditions while it has slowed down considerably in March. Sellers, particularly from Central Europe, who sought increases of up to €50/ton have had to revise their offers downwards and concede to rollovers or much more modest hikes of €10-20/ton in March spot business. Due to lack of interest for imports, a trader also pulled down US PVC offers regardless of the cost pressure apparent in the US. There is still almost no interest for imports as material from West Europe abounds at much lower prices in the local market. Demand from Asian buyers has also started to show signs of weakness. In China, slower than expected demand following the Chinese New Year holidays combined with lower feedstock costs have resulted in consecutive declines in the local market until this week. The weakening performance of the local market has pushed domestic producers to take a renewed interest in exports while Asian sellers also complained about the demand in China lagging behind their expectations for March PVC business even though they achieved an increase of US$20/ton. As for next month, major regional producers are expected to announce small hikes over March so that they have some room to negotiate. The Southeast Asian markets have also responded to softer demand in China and buy interest, which was considered quite good for imports until last week, has waned this week due to buyers’ hopes to see lower prices following the recent slowdown in China. Some regional producers even consented to discounts of US$15-20/ton for done deals in the local market, almost matching February levels. The upcoming Thai New Year holidays in April will also dampen demand further since some players in Thailand and neighboring countries are expected to be sidelined, regional players report.
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