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january 29, 2014

Polyvinyl Chloride

The majority of European PVC Freely Delivered (FD)
contracts were settled at plus Eur10-20/mt, buyers and
sellers said this week, citing a range of Eur860-890/mt net,
depending on region and customer size. This represented a
small margin, after ethylene settled in January at plus Eur15/
mt or Eur1,240/mt ($1,644/mt) FD NWE. Platts assessed the
FD contract at Eur865.50/mt net, up Eur10/mt from last week
and Eur20/mt from December. So far in Northwest Europe,
two consumers confirmed settling at plus Eur10-15/mt, and
one cited an outright settlement at around plus Eur840/mt
net. In the Mediterranean, one consumer confirmed fully
settling at plus Eur15/mt or Eur860/mt. On the production
side, one supplier in NWE confirmed settling at Eur15-20/
mt this week, down from Eur20/mt last week, but declined
to comment on an outright price, noting demand in NWE
had been stable throughout January, rising during the second
half. In the Mediterranean, one producer confirmed settling
at plus Eur15-20/mt initially, or a maximum price of Eur890/
net, but was not available to comment further this week. In
Central and Eastern Europe, two producers confirmed fully
settling at Eur10-15/mt, and one added that higher price
targets earlier this month were “too ambitious.” However,
demand had since picked up, the source said, adding: “Some
of the converters have much better performance than
in January 2013, or before, due to the mild weather and
better economic circumstances.” In the UK, one producer
source said contracts were fully settled at plus GBP15/mt,
unchanged from last week, adding that demand had picked
up in the second half of January. Looking at downstream
sectors, demand from the Do It Yourself business in NWE
was picking up, the first NWE buyer said, adding: “It is
still on a gradual level; there are no peaks any more.”
Meanwhile, the construction business was expected to slow
due to colder weather. “Now, I believe, the harsh winter
will also hinder the business in general; in particular, in
construction application,” the CEE producer source said.
In addition, the UK producer noted it was too early to tell
whether the construction sector in the UK would grow
this year. However, in the fourth quarter, output in the UK
construction sector from October-December fell 0.3% quarter
on quarter due to a sharp fall in activity in November, the
Office for National Statistics (ONS) said Tuesday. Output
in November fell 4% month on month amid a fall in
new work, repairs and maintenance, the ONS said. Going
forward, market participants were tracking feedstock prices,
particularly ethylene. European olefin buyers said Tuesday
they were more optimistic about a decrease in ethylene
contract prices than propylene for February, amid tightness
in propylene and a fall in naphtha prices. “Everyone is very
excited about the ethylene price involvement in February,”
the CEE producer source said, adding: “Since PVC producers

Copyright © 2014, McGraw Hill Financial

suffered some marginal loss during the off-season months,
we desperately need to recoup the thin margins as soon as
possible.” Overseas, the Turkish PVC market was struggling
with currency loss, despite the intervention of the Central
Bank, sources said. One European supplier was delivering
delayed orders and was not expected to make any new offers
until March. The most competitive offer from Europe was
$1,060/mt CFR Turkey from a producer, sources said. Chinese
and Korean suppliers also recently entered the market, but
at $1,000/mt, subject to 6.5% import duty, not including
freight costs of $60-70/mt, their offers were not so attractive,
the NWE trade source said. Platts assessed the Turkish market
at $1,050-1,055/mt CFR, down $20/mt on week. In other
news, Ukraine’s petrochemical company KarpatNaftoKhim
suspended most of its production facilities, due to continuing
weak demand, and was not likely to resume operations until
early April, a company source said Tuesday. Its only facility
in operation was its downstream PVC unit for window and
door profile production, a company source said.

United States
US export PVC prices moved up $10/mt week on week to
be assessed Wednesday at $990-1,000/mt FAS Houston,
as a production outage, tight spot availability and strong
domestic markets pushed prices to a level last seen on
March 20, 2012. Spot product offers were heard at $1,0101,020/mt FAS Houston, while deals were heard in the $9801,000/mt FAS Houston levels. “Buyers are still shocked at
the $50/mt increase in export prices and buying has not
picked up yet, but offers from producers for the next month
are coming in above $1,000/mt FAS Houston basis. Fresh
PVC will be more expensive,” one trading source said.
“Axiall still has production issues and many other producers
are covering Axiall’s domestic buyers affected by the outage
— that, in turn, is reducing export volumes, and pushing
prices up,” another trading source added. “We are holding
our buying level at $950-960/mt FAS Houston, there isn’t
much market for anything above,” a third trading source
said. In domestic markets, the assessment was unchanged at
53-55 cents/lb delivered, as talks continued to be centered
at strong housing numbers and ample demand despite the
cold weather gripping most of US. “The increases are on the
table and we expect at least 5 cents/lb to go through in the
first quarter,” a distributor source said. Shintech, Axiall,
Oxy, Westlake and Formosa announced 3-cents/lb per
month increases for January, February and March, however
full acceptance of the increases was doubtful, sources added.
In production, Axiall planned to bring its VCM plant at
Lake Charles, Louisiana back online in the last week of
March and was to lift the associated force majeure in April,
the company said in a letter to customers Tuesday. The
company said that it had concluded the majority of work
on the facility. The VCM plant was shut after a December
20 fire and led the company to declare an FM on VCM