Buying interest for VCM dips in Asia as spot prices shoot up in USA

09-Mar-10
At a time when ethylene prices have dropped in major Asian markets, prices have soared in USA. Soaring ethylene prices in USA have begun to have an impact on spot VCM markets, which are in turn likely to lead to changes in global PVC pricing, as per Chemorbis. January and February monthly ethylene contracts in USA settled at the beginning of March with a cumulative increase of US$210/ton over their December level, along with spot prices that have exhibited strong upward movement. Spot ethylene prices posted a cumulative increase of US$475/ton in the first two months of the year and have already posted further increases of US$250/ton in the first full week of March. As a result of these spikes in ethylene feedstock costs, VCM sellers in the US have raised their offers as well. Spot VCM offers for export were reported US$150/ton higher on a week-on-week basis. Although delayed purchases of spot ethylene have helped mitigate the impact of the rise in ethylene costs on downstream markets, one EDC producer has already predicted that the massive upward shift in production costs will soon make itself felt on spot PVC prices in the US, which may affect their competiveness in global markets, where American PVC sellers had been enjoying cost advantages throughout much of 2009. Meanwhile, declining spot ethylene prices in Asia have begun to take their toll on the region’s VCM market. At the end of February, a major Japanese producer announced their VCM offers for March with increases of US$40-50/ton when compared with their February done deal levels, triggered by higher March PVC import offers to the Chinese market, which posted similar month-over-month increases. Although March PVC business has been finalized at or close to producers’ initial offer levels, buyers are showing stiff resistance to higher VCM prices. Although buyers generally attributed their resistance to softening PVC prices in China’s domestic market and signs of softening regional demand, falling ethylene prices are also supportive of buyers’ resistance to higher VCM offers. Spot ethylene offers to Northeast Asia declined around US$50-70/ton over the past week, bringing the cumulative decline from early February to around US$180-190/ton.
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Milacron 450 ton electric injection molding machine

Milacron 450 ton electric injection molding machine