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European PVC spot prices hit year-to-date high as supply crunch persists

Highlights

Europe grapples with PVC supply shortage

Domestic, export PVC highest this year

London — European PVC prices have increased again in October due to added supply shortages, despite steady demand from the domestic and export markets.

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On Oct. 14 S&P Global Platts assessed FD NWE suspension grade PVC spot prices at Eur850/mt, up Eur30/mt week on week and the highest level so far in 2020.

On the supply side, producers continue to face multiple issues, with forces majeures at a few sites in Europe. French PVC producer Kem One issued a force majeure on the supply of mass and suspension PVC from its Saint-Fons and Balan sites in eastern France, effective from Oct. 13, while Shin-Etsu declared force majeure on deliveries from its Pernis site in the Netherlands effective Oct. 13. It was forced to shut the plant in response to a power outage at the nearby refinery, according to customer letters seen by Platts.

A force majeure previously declared by Inovyn also remained in place, market sources said. Inovyn declared the force majeure on Sept. 1 on PVC deliveries from its three northern plants following a power outage at the company's Rafnes VCM plant in Norway. Inovyn's Rheinberg production plant is also still undergoing maintenance work into October.

In addition, other plants coming out of outages are experiencing further maintenance issues and a lack of vinyl chloride monomer, the primary feedstock for PVC, forcing some producers to run below capacity and rendering them unable to rebuild sufficient stocks. "So we are absolutely sold out," one producer said. "Customers do not understand that we cannot supply more. UK customers were more stressed, Spain, Italy, France keeping customers at agreed levels. But customers need more."

Another producer said the various forces majeures would make for a difficult few weeks to come. "No matter the price, there is no material to talk of," the producer said. "Only at the end of the year can we increase inventories."

PVC demand has seen to be very strong over a number of months. Uncertainties about a second wave of COVID-19 infections and experiences from the first global lockdown have forced consumers to adopt a cautious outlook on product needs.

In the key export markets, Turkey has been hit hard by the supply shortages from Europe. Turkey was heard have received limited offers from Egypt and the US, and consumers have been forced to rely more on local producers. They can typically supply up to 10% of the country's consumption and were heard offering at close to $1,600/mt CFR Turkey equivalent. On Oct. 14 Platts assessed CFR Turkey PVC at $1,250/mt, up $50/mt week on week and up 25% since the beginning of September, when the supply crunch first hit the Turkish market.

"The first half of November will still be tough, and demand in November is looking strong," a consumer source said. "It looks like the whole supply chain from raw materials to end customer is empty now. Everybody wants to rebuild some stock, and as a result November demand is expected to be good for the PVC industry."

In August, European exports of PVC to Turkey fell by around 18% year on year to 36,598 mt, according to the latest Eurostat data. Exports to China rose by around 62% to 4,565 mt, and to India fell by around 39% to 6,266 mt, the data showed.