Estimate for new round of PVC hikes may take place in May in Europe
PVC multinationals in Europe are terminating their April transactions with price hike in the range of €70-150/ton depending on several origins. According to ChemOrbis, some sellers have already claimed to have been sold in the first half of this month. It is estimated that the stimulated hike attempts will be relatively high. Firms want this hike to happen in May because of rising ethylene costs and additional supply issues in the region.
An increase of €100/ton was attained by a West European PVC producer for deals done in April. Availability of naphtha is in Europe is considerably very low. Along with ethylene, a source from the producer wanted strong hikes for increasing feedstock costs of naphtha as well. According to the source, the shortage of naphtha will be continued in May and thereby encourage the new hike requests. A report from another West European supplier dictated that due to great demand and short supply in April, they are only able to provide material for their regular customers.
A producer source noted that taking rise in spot ethylene prices and lack of import PVC cargos into consideration, the May outlook is forcible and compelling. A distributer in Italy achieved €120-150/ton hikes when he trimmed his initial April target of €170/ton. As the supply will be easily accessible, smaller increases in the month of May can be foreseen. One of the converters stated that supply issues would be more beneficial for hike rise than the production costs while the other converter expected gains of €10-20/ton in the approaching month. In early April, spot prices of ethylene escalated to €130/ton on FD NWE basis. Simultaneously, Naphtha was increased by $20/ton in Northwest Europe.
A PVC compounder used near prime PVC in April since he was unable to get any deals from his Central and South European suppliers in Italy. Another converter made some inventory stocks purchasing short supplies and estimated price hike in the month of May. But he also commented that the market may reverse the going procedure from June or July.
According to ChemOrbis, Germany buyers believe that higher energy costs will lead to new PVC hikes very soon. From the start of April, ICE Brent crude futures gained around US$5/barrel. Moreover, Some PVC closed down in the country. Because of ethylene shortage, a West European producer is experimenting to produce ethylene at their PVC plant in Germany following their supplier’s force majeure declaration. Another West European producer’s PVC plant in Germany is functioning off the shelf for some period where the stocks will last until the April end.