PVC falls to historical lows in US and WCSA, with no consensus on market direction

Market participants diverged on the direction of the polyvinyl chloride market after both FAS Houston and CFR West Coast South America reached their lowest prices ever registered by Platts.

While producers said ethylene's higher prices may stem the price decline, other market participants called low demand the biggest price driver.

Platts assessed US export PVC at $625/mt FAS Houston July 30, while in WCSA, spot PVC was assessed at $670/mt CFR. Those were the lowest levels since Platts, part of S&P Global Energy, launched the price assessments in July and August 2020, respectively.

Market heards still do not show clear evidence of recovery. On July 31, a producer reported a trade at $630/mt FAS Houston for a volume of 4,500 mt loading in August. On the same day, a trader said this price was above the market value.

"The buying sentiment is around $590-$600/mt," the source said.

In the previous week, a source told Platts of an offer at $590/mt FAS Houston, but this could not be corroborated.

The same producer expected higher prices in the coming months for the construction staple used to make pipes, window frames, vinyl siding and other products.

"I know that there are a lot of numbers floating around, but for us, this really is the bottom, with ethylene cost increasing and caustic softening," the source said. "I don't see us making any further reductions."

Similarly, a second producer said July 31 that "current prices are the lowest," adding that the lack of profitable operations for traders and suppliers can't be sustainable.

"I believe traders are losing money with these prices," the same producer said.

As one of the factors to support a bullish forecast, the second producer cited Asian prices that have not yet become significantly competitive in Latin America, even with lower freight rates.

In turn, the first trader said that further price decreases were possible, and even if ethylene prices increase, "the market wouldn't be turned around without real demand."

"Nobody knows how it will go in the future, but most players might think the market would be bearish," the source added.

Taking a different view, the second producer said "demand is not so bad," adding that Latin America remained one of the key markets for the US.

"This year the price fell because of oversupply, it's true, but it depends on the market," the second producer said.