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Bullish Momentum Anticipated for PVC Prices in September 2023 Amid Supply Constraints
Bullish Momentum Anticipated for PVC Prices in September 2023 Amid Supply Constraints

Bullish Momentum Anticipated for PVC Prices in September 2023 Amid Supply Constraints

  • 07-Sep-2023 2:50 PM
  • Journalist: Rene Swann

Polyvinyl Chloride (PVC) prices for September 2023 have drawn expectations to gain bullish market momentum, driven by the hike in the monomer contracts, easing stock pressure, and anticipations of bright replenishment activity. To summarize, the escalation in the PVC prices resulted from dwindling inventory levels amidst reduced production rates and constrained supplies coupled with leveling up upstream crude oil costs, all within the context of static demand fundamentals and tight producer margins amid higher costs.

During the initial week of September 2023 in Europe, PVC prices remained steady. This stability was due to regional participants slowly coming back from their extended summer vacations and choosing to cautiously engage in pre-purchasing activities for the month ahead. In August, the slump in construction activity amidst high-interest rates led to a downturn in the PVC price trend throughout the year's first half. As recent insights have shown, the UK construction sector remained stagnant in the wake of the drop in new order volumes. Moreover, housing construction remained in a recession due to high-interest rates and muted consumer purchasing confidence, affecting PVC prices significantly.

The expectations for a hike in Ethylene prices encouraged the PVC sellers for September 2023 in the line of reduced stock availability and anticipation of further rise in the international offers. Despite the absence of firm support driving buying interest, the spot market might see a resurgence in buyers due to restocking requirements and the interest in favorable import prices.

At the beginning of September 2023, PVC prices in the United States remained steady due to increasing uncertainties in production run rates, primarily caused by supply disruptions from Hurricane Idalia and scheduled maintenance turnarounds. Additionally, export prices for PVC from the USA were influenced by rising freight costs, worsened by the low water levels of the Mississippi River. Furthermore, global PVC market sentiment turned bullish as crude oil prices surged this week. This increase in crude oil prices was driven by producers' expectations of supply constraints in September 2023. Notably, Brent Crude November futures experienced a 3% increase, while US West Texas Intermediate Crude (WTI) October futures surged by 9% during the same period. On the demand side, inquiries for PVC in the construction sector within the domestic market were modest, contributing to price stabilization.

As per ChemAnalyst, there is a positive outlook for PVC prices anticipated for September 2023, driven by increased costs of upstream materials and reduced production rates. Looking at demand, downstream industries' offers for PVC, including construction and household segments, are expected to play a role as key factors driving costs higher in the upcoming weeks in the line of seasonal consumption.

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