European and Turkish PVC prices spike on supply chain disruptions, higher production costs

European and Turkish polyvinyl chloride prices have increased sharply as the Middle East conflict drives up production costs and causes shipping disruptions, with Platts price assessments gaining at least $60/mt in the week to March 4.

The outbreak of war in the oil- and gas-rich region caused a surge in energy prices in Europe. As a consequence, and due to the energy-intensive nature of PVC production, producers have sought to increase prices in both the contract and spot market to recoup additional production costs.

Platts assessed the Dutch TTF day-ahead contract at Eur46.80/megawatt-hour March 4, down Eur6.70 day over day, but up Eur14.64/MWh -- or 45.5% -- since Feb. 27

Similarly, the Middle East conflict has resulted in a significant increase in naphtha prices, the key feedstock for ethylene. Naphtha CIF NWE cargoes spiked more than $100/mt in the first three trading days following the outbreak of the war, though they eased back slightly to be assessed at $671.25/mt on March 4, Platts data shows.

In a slightly delayed settlement, the ethylene industry-settled monthly contract price for March settled at Eur1,145/mt on March 2, a Eur50/mt increase from February.

Finally, the market has seen increased global freight rates due to war premiums and increased insurance costs. Moreover, there has been a more limited availability of freight and longer lead times for running vessels.

Consequently, there has been reduced availability of imports and sellers withdrawing their offers from the European market. For those still offering into the market, there has been a steep increase in offers. In the free-delivered Northwest Europe market, one producer increased its spot and contract offers by Eur90/mt week over week, while a second producer increased by Eur80/mt.

In Turkey, the majority of offers were withdrawn on a CFR Turkey basis. However, sources indicated a strong increase in CFR prices, and within the domestic market, prices were heard to increase $50-$100/mt on an Ex-works Istanbul basis.

Platts is part of S&P Global Energy.