Limited PVC supplies out of the US offset by lethargic demand

19-Sep-13

Market players consider PVC supplies from USA limited as availability from the country is also expected to be curtailed by planned shutdowns at domestic producers. Shintech has halted production at its PVC complex in Louisiana for three weeks in H2-September, according to ChemOrbis. OxyVinyls is also slated to undergo a shutdown at its 950,000 tpa PVC plant in Pasedana for 2-3 weeks in October. Tight supplies as well as higher ethylene contract settlements paved the way for US producers to seek higher prices in the domestic market. However, export PVC prices out of the US have been showing a mostly steady trend for the past one month due to lack of interest from regular export destinations including China, Turkey and Egypt. A source from a global trader said, “When taking the new export offers from the US into account, the low ends of the current PVC offers to Turkey and Egypt should not be there; however, they are still obtainable owing to poor buy interest.” Another trader based in Istanbul said, “The PVC market continues to be squeezed between high costs and poor market dynamics in the face of stagnant demand. Our PVC suppliers in the US are not indicating further increases for the near term but they are not giving the signals for any decrease either as they say they are able to sell to Latin America.” A source from a global trader’s Cairo office also reported offering US PVC at stable levels to Egypt. “Demand is not good at all. Players are sidelined from import activities given the unstable market conditions in Egypt,” he said. Sentiment appears to have softened particularly in China’s domestic market, meanwhile. Domestic producers expressed stable to soft expectations for the near term pointing to diminishing buying interest and gradual softening in local prices. Traders offering US PVC to China were holding their offers steady on the back of their limited stocks. One of them said, “We are doubtful that further increases are likely given the shifting sentiment in the local market.” The US is the largest import supplier of PVC for Turkey, Egypt and China. According to ChemOrbis, a lack of stock pressure helps US PVC suppliers remain relatively firm on their offers in these export destinations; however, players are now wondering which factor will have the dominating power and set the direction of the PVC market for the near term amidst poor demand on the one side and producers’ tight supplies on the other side.