European PVC Prices to Stabilize in May as Sellers Indicate no Improvement in Margins

The European PVC (Polyvinyl Chloride) market saw modest growth at the termination of April 2024, yet producers struggled to widen their profit margins despite lower imports and production cuts. Expectations for May 2024 suggest a stabilization, as tight producer margins and unfavorable supply-demand dynamics persist. Additionally, PVC market participants are cautious about potential provisional antidumping duties from the European Commission, stemming from an investigation launched in November 2023. This has dampened interest in PVC cargo from the US and Egypt during this timeframe. A decision is anticipated by mid-May. As a result, more significant changes were necessary by the players to shift the balance in their favor due to weak demand.

PVC prices remained relatively stable in the final week of April 2024, as sellers worked to safeguard their profit margins, following a rebound in March 2024. However, attempts to raise prices in line with the overall monomer outcome proved unsuccessful in March and April due to adverse conditions in downstream markets. In April, most PVC transactions saw price increases in line with half of the ethylene hike. Despite suppliers' inability to bolster their margins in the first quarter of 2024, they remained cautious to avoid losses. Nonetheless, regional suppliers are encountering heightened competition, prompting adjustments in initial price increases to sustain market momentum. Currently, stability in the PVC price trend is observed, reliant upon the initial price level and purchase volumes.

Moreover, the slowdown in the PVC exports primarily resulted from the subdued derivative markets, as the regional demand has failed to meet seasonal expectations. Buyers are opting for need-based purchases due to reduced consumption levels, contributing to sluggish sales, particularly in West European countries. Meanwhile, the construction sector indicated a significant dip in the PVC demand and the pipe manufacturers are offering lower inquiries in response to a lack of new projects and intensifying competition.

Compounding the situation is the absence of bullish indicators for the near future, leading processors to refrain from engaging in spot or distant cargo transactions. According to a trader, buyers are adopting a cautious approach, anticipating no immediate market firming and expecting minimal upticks in demand amidst the upcoming holiday-shortened month of May.

As per the ChemAnalyst, the expectations for May suggest stability in PVC prices following a consistent upward trend, with ethylene projections remaining stable to slightly softer. Demand is anticipated to remain to be limited to basic needs, while the supply outlook remains steady. However, despite market stability, producers face tight margins and uncertainties in the energy complex, particularly amidst tensions in the Middle East and elevated production costs.