PVC contract prices miss target despite outages

Despite Europe’s already stretched polyvinyl chloride (PVC) supplies being exacerbated by a series of ethylene cracker outages, producers concede that November contracts are set to fall short of initial targets.

People were asking for increases of around €50/tonne at the beginning of the month when there were some tensions and a lot of issues regarding feedstocks,’ says one source. ‘These concerns have since eroded as it is less tight than it was, but we’re still negotiating a small price increase for November.’

Some say that it is the seasonal nature of PVC as well as the unexpected outages that are causing a slowdown in the market, and numbers now seem more likely to rise by €10-30/tonne. The past few months have been littered with hikes, fuelled by soaring feedstock costs, increasingly limited supplies and the inability to replenish stocks following an unexpectedly successful summer. A €30-40/tonne rise was achieved for October, taking values to €950-980/tonne.

Upstream, ethylene spot numbers are heard at $1225/tonne and molecules are extremely scarce. Shell’s Moerdijk, Netherlands, cracker has been having problems since mid-October and declared force majeure!, along with several other facilities such as Mossmorran in the UK and Geleen in the Netherlands (see page 14). As a result of these closures, ethylene availability has diminished and put added pressure on PVC. A few PVC sellers have since been forced to declare force majeure! or impose sales allocations. Many, however, are arguing that the ‘worst is now over’.

A rollover is predicted for PVC contracts in December with activity slowing due to the Christmas holidays. Players note however, that additional hikes are likely in the New Year. ‘It is going to be so difficult to get raw materials next year and I think it is definitely going to be a sellers’ market where, to some extent, they can dictate the prices they want,’ warns one source.

‘Certainly the ethylene price will go up in the first quarter of 2005, and PVC demand will be very strong because there won’t be the supply available. People are going to be very restricted because there won’t be the possibility to produce much more volume.’