Lower ethylene values support soft sentiment in Europe’s PVC market

Europe's PVC market has started September on a softer note after initial prices and sell ideas emerged with decreases from levels seen in August as per ChemOrbis. Triggered by lower upstream costs, the recent softening came despite the heavy turnaround season in Europe, with major regional suppliers including Kem One, Ineos, Anwil and Vinnolit, conducting planned maintenance shutdowns in the August-September period. September ethylene contracts settled lower by €55/ton (US$72/ton) from August at €1150/ton (US$1510/ton) FD NWE last week after two initial settlements were withdrawn due to a misunderstanding over the decrease amount. A West European producer is yet to reveal new September PVC prices while a producer source reported that their discount would be smaller than half of the ethylene contract drop. A South European producer started giving initial September offers with decreases of €27/ton, equal to half of the ethylene contract drop. A producer source commented that demand is weak following the holidays. A distributor in Italy started giving September PVC offers for two different Central European origins with decreases of €20/ton from August. “Demand is slow following the holidays, but we expect it to revive in the second half of the month. Our availability will be limited this month since one of our Central European suppliers will be conducting a planned maintenance shutdown during September,” he added. Another distributor based in Switzerland expressed his September sell ideas for West European PVC with decreases of €25/ton after conceding to discounts of €10/ton on his August deals. “Demand is slow, but it is in balance with supply for now due to several ongoing maintenance shutdowns. Decreases may be limited in the first half of the month, but they may reach half of the ethylene contract drop afterwards once buyers return to the market to make purchases. Central European origins are likely to post smaller drops compared to other origins given the turnaround schedule in the region,” he commented. A converter in Germany obtained discounts of €5-10/ton from two West European PVC producers for his August gentlemen’s agreements. The buyer expressed his September buy ideas €25-30/ton below August. He reported, “Suppliers may approach the market with smaller decreases at the beginning of the month before conceding to larger drops of up to €30/ton. Our end product demand was weak in August when we suspended our production for two weeks. In addition, end product customers are more cautious about placing orders.” According to ChemOrbis, a pipe producer settled his August gentlemen’s agreements with West European suppliers with rollovers. The converter revealed his buy ideas for PVC with decreases of €20/ton for September. “We are in talks with our supplier, who is yet to reveal their new prices, and they are planning to limit their discounts to €15/ton. However, we think that sellers are likely to concede to slightly larger drops later in the month. The PVC market may remain on a soft note until December due to the low season and muted demand,” he said. A compounder bought West European PVC with discounts of €25/ton for September from the spot market. The buyer also reported receiving Central European offers €20/ton below August, adding that he limited his purchases to a needs only basis due to weak demand for his end products.