The Northwest Europe forward delivered spot PVC price has dropped on week, reflecting a sharp fall in the April ethylene contract price and poor demand, market sources said Tuesday.
Ethylene -- made from oil or natural gas which is refined and cracked -- is a key feedstock in the production of PVC.
The NWE FD spot PVC price was last assessed by Platts Tuesday at $855-860/mt, Platts data shows. However, since then, the spot market has come under downward pressure and prices have softened to traded levels of $835-855/mt, sources said.
"The direction is clear after the minus Eur60/mt drop in the ethylene price. Customers are fighting for the April PVC contract to drop by Eur30/mt on-month," one trade source said.
The April ethylene contract price was announced earlier this month at Eur1,265/mt, down Eur60/mt from March.
Spot prices were also falling due to poor PVC demand, sources said.
"The ethylene price is the key driver, but buyers are of course not in a big hurry to buy cargoes at the moment," a second trade source said.
So far this month, the spot market had been very quiet with less volume trading hands compared with March, the first trade source said.
"It is still quiet and we are definitely behind our targets," the source said, adding that so far, he had only sold 20% of the typical volume he would expect to sell by this point in the month.
Typically, PVC demand rises in the spring due to an increase in construction projects during warmer weather. However, months of cold weather amid challenging economic circumstances has taken its toll on the construction industry, according to market sources.
