European polyvinyl chloride (PVC) market have the traditional summer lull is now a thing of the past

Consistently high levels of demand in the European polyvinyl chloride (PVC) market have seen several producers suggest the traditional summer lull is now a thing of the past. While the holiday period normally allows players to replenish stocks and schedule routine maintenance turnarounds, observers say there is no respite in the market, which is currently ‘outperforming predictions’.

‘Under normal conditions you would get a slowdown in July and August, but it doesn’t look like that’s going to be the case this year,’ says one source. ‘People expect demand to be down in the summer, but it has been better than expectations and much better than last year.’

PVC numbers continue to rise, climbing €40/tonne to €830-880/tonne for July. Players say that the current ‘atypical demand’ will lead to additional hikes over the coming months, with some targeting a further €30-50/tonne in August to help recoup lost margins. Contract prices have rocketed over the past few months, with hikes of around €295/tonne since this time last year.

The market remains extremely tight, with stocks at critically low levels. Several shutdowns are planned during the next few months, including EVC’s Runcorn site in the UK and LVM’s 225 000 tonne/year facility near Lille in northern France.

One producer says it has had to place its customers on allocation for July as they are ordering far more than it can supply. ‘Companies are under such economic pressure that they now have to keep their machines running, even in the holiday period,’ adds one player. ‘One thing we’re going to have to consider is whether we can afford to shut down because August is changing and I think this trend will continue.’

Raw material also remains limited and costs continue to escalate. The quarter-three ethylene contract was recently agreed at €635/tonne, up €28/tonne on the previous quarter, while spot prices are heard at between $870-900/tonne. Sources say PVC is growing by 8% each year in central and eastern Europe, with offtake into the profiles sector particularly strong.

The construction industry has also seen significant signs of improvement over the past year and combined with solid pipe and film/sheet business, buyers are optimistic for continued improvement in the PVC market.