An 8% drop in the ethylene contract settlement for February has set a bearish course for downstream polyvinyl chloride.
The NWE PVC spot price fell Eur15/mt on the week Wednesday to Eur785/mt (about $856/mt) FD NWE, as expectations of lower feedstock ethylene prices slowed New Year re-stocking.
The February contract price of ethylene was settled Eur70/mt lower than January at Eur830/mt FD NWE Wednesday afternoon, after the assessment window for PVC had closed for the day.
The initial agreement was between seller Shell and buyer Vinnolit. Vinnolit confirmed, Shell did not. The follow was between buyer Clariant with seller BASF. Both confirmed.
This followed the February contract price for NWE propylene being fully settled Wednesday at Eur560/mt FD, down 9.7%, or Eur60/mt, on the month, industry sources said. This tracked the fall in feedstock naphtha.
PVC buyers are holding out for lower prices, before they replenish inventories. “Stocks are low, people are just buying what they need,” a trade source said Wednesday.
Spot prices in Turkey fell $22/mt on the week to $700/mt CFR Turkey, hobbled by a weak economic environment and lower expectations for ethylene.
Selling ideas for Brazilian material, pegged at $660-675/mt CFR Turkey plus 6.5% import duty, undercut European offers, which were pegged at $710-730/mt CFR Turkey.
There is some upside to prices in February. The Turkish market is weak but it is an important export destination for European material and so producers are keeping the trade flow open, despite the weak prices. “[One major producer] keeps moving product to Turkey and keeps material from piling up so we may not have a bad month in February,” a trade source said.
Imports to Europe were heard scarce, especially from Mexico. Europe imported 15,816 mt from Mexico in November, 24.35% more year on year.
Mexican deliveries accounted for 52.23% of imports in November 2015, compared with 55.71% of imports in November 2014, according to Eurostat data.
