31 May, 2018
In Europe’s PVC market, sentiment had already turned firmer ahead of the June ethylene settlement, which settled €63/ton higher on Wednesday. This was mainly given upstream support and due in part to some suppliers’ intention to recover their margins by asking for increases more than the half of the expected ethylene hike.
For the past two months, European PVC sellers were unable to pass cost-driven hikes on their prices and conceded to mainly rollovers or only smaller increases in a few cases.
Before ethylene settled, a major West European producer commented, “We expect to see increases of around €50/ton in June ethylene contracts. Our aim is to achieve increases beyond half of whatever the outcome of ethylene contracts will be to recoup our lost margins.”
A source from a different PVC producer said, “We expect a firmer trend in June despite comfortable supplies. Demand has been rather good in May and, along with the higher outcome of the ethylene, this will support price hikes in June.”
On the other hand, some players’ approach was skeptical as they think that comfortable supply levels within Europe might keep the size of sellers’ hike attempts in check.
A distributor from Italy commented, “We heard about firmer June expectations; however, to what extent upstream pressure will push PVC prices up remains as a question mark amid the recent losses in the energy markets as well as ample ethylene availability. PVC buyers are not in a rush to buy as PVC supplies are comfortable. Even after the higher ethylene settlement, PVC producers might struggle to pass increases onto their June PVC prices.”