4 January 2019

Polyvinyl Chloride
USA

Chemical Prices | News | Analysis Editor: Bill Bowen

Overview | Prices | Upstream | Production | Other Regions | News

Please click here for full details on the criteria ICIS uses in making these price assessments.

Overview
Overview

• US December contracts roll over

• Spot export prices hold steady at slightly higher level
• Ethylene contracts flat for December

The US polyvinyl chloride (PVC) market held steady as December contracts were assessed flat with November and spot export pricing was stable after an uptick in
mid-December.
A major US producer withdrew its December contract initiative for an increase of 2 cents/lb ($44/tonne) and re-issued the notice for January contracts. Other producers
are weighing options, including a larger increase for February.
Global markets remained softer and buyers in some regions were tentative in their purchase plans as China showed increasing signs of economic weakness and global
stock markets swung up and down.

Ethylene contracts for December concluded at a rollover of November prices.

Outlook
Barring an economic upset in a major market or a steeper slowdown in China, PVC prices are expected to slowly firm toward a peak in the second quarter, which is the
usual annual trend.
Prices
CONTRACT PRICES
Price Range One Year Ago USD/tonne
PVC Pipe
DEL US DEC US CTS/lb n/c 75.00-79.00 n/c 74.00-78.00 1653.47-1741.65
PVC General Purpose
DEL US DEC US CTS/lb n/c 77.00-81.00 n/c 76.00-80.00 1697.56-1785.74

US contracts for December were assessed at a rollover despite separate efforts by producers to gain a 2 cent/lb increase.
The proposed increases had been announced when ethane and ethylene bottlenecks had sent feedstock prices soaring.
But ethylene prices and availability have stabilised.
Additionally, global markets cooled toward the end of last year, lending sentiment of softer prices and raising questions about China’s economic health.
End-of-year destocking activity also worked against the proposed increases.
But one producer withdrew its proposal and reset it for January.
Other producers are said to be considering their own timing, with one saying that February would provide a better chance for acceptance in the market and considering a
larger increase for that month.
US producers still enjoy comfortable margins and and US contracts finished the year up by a net 2 cents/lb from
2017. The following chart shows the spread between US PVC and ethylene prices.
US PVC-ethylene spread

SPOT PRICES
Price Range Four Weeks Ago USD/tonne
PVC
DEL US US CTS/lb n/c 35.00-36.00 n/c 35.00-36.00 771.62-793.66

Spot business is rare, as most producers allocate all production not committed to domestic contract sales into the spot export market. Little material is left for domestic
spot business.

EXPORT PRICES
Price Range Four Weeks Ago US CTS/lb
PVC
FOB USG Export USD/tonne n/c 775-790 n/c 755-780 35.15-35.83

US spot export prices are holding in the current published range.

Current prices at the low end of the range will allow sales into China and other Asia markets.
Demand in most US export destinations is gauged as good, though buying activity is muted as market players return from the holiday period in North America and
Europe.
Explosions at plants in China in recent weeks have prompted notions that PVC will be tight in that region during the upcoming Lunar New Year observances, a holiday
in most northeast and southeast Asia markets.
One market participant said that the loss of business activity during the holiday period will likely offset the trimmer supply and not have a significant impact on prices.
Export volumes typically jump higher during the first quarter on restocking activity. That also usually helps push prices up in spot export markets.

Upstream
Ethylene
US December ethylene contract prices settled flat as production curtailments and increased consumption led to a more balanced market in late 2018. US ethylene spot
prices fell amid the start-up of new capacity in late 2018 and expected start-up in early 2019.

Chlorine
US production of caustic soda and chlorine in November rose 6% from October as effective plant utilisation rates rebounded to 86%, according to data released Friday
by the Chlorine Institute.

Production has continued higher each month than for comparable months in previous years, but US production for 2018 is generally flat with 2019, though slightly
below last year's volume.

FEEDSTOCK SPOT PRICES

Price Range Four Weeks Ago
VCM
FOB USG USD/tonne n/c 590-620 n/c 590-620

Production
US and Canada production, domestic sales and exports lowered in November, according to revised figures from the American Chemistry Council using data compiled
by Vault Consulting.

The declines are in line with seasonality in the North American market with the onset of winter and the decline of construction activity and the demand for building
materials made from PVC.
Other Regions
South Asia-Middle East
PVC spot prices in India, the Gulf Cooperation Council states and the eastern Mediterranean were unchanged in the week following limited discussions in the wake of
the holidays. No fresh offers were made, although many players expected fresh offers from Asian producers in the next two weeks ahead of the Lunar New Year
holidays. Some players said there were signs of demand picking up for local parcels, despite the lack of discussions in the import market.
Asia Pacific
PVC prices for deep-sea CFR China cargoes were stable to firm, tracking a firmer offer in the week for US-origin cargo. PVC prices remained stable for other regions
in Asia, with many market participants choosing to wait and observe interest for upcoming February-loading offers.
Europe
European origin export prices and prices in Turkey have fallen on the high end, with market activity relatively slow to pick up following the new year. New offers from
Europe to Turkey were slightly down from the previous assessment although the lower end of the market could not be widely confirmed. Further information is
expected later in January.

News

US Westlake Chemical closes acquisition of France's NAKAN

Formosa expects US cracker start-up, PE commercial ops in H2 2019
US PVC spot export prices rise from their recent bottom
Economic indicators
US adds 312,000 jobs in December; unemployment rate rises to 3.9%
US durable goods orders rise 0.8% in November
US housing starts rise 3.2% in November
US December homebuilder confidence falls amid affordability concerns

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Polyvinyl Chloride
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