US export PVC prices dropped $20/mt Wednesday to be assessed by Platts at $620-$630/mt FAS Houston, following talks of strong supply in November and December, weak global demand and declining ethylene feedstock prices, sources said Wednesday.
The assessment is the lowest since May 13, 2009's $600-$610/mt FAS Houston assessment, according to Platts data, having dropped $245/mt, or 28.16%, from a 2015 high of $870/mt FAS Houston seen in April.
Sources said overseas markets remained oversupplied with demand still weak. Additionally, trading sources continued to discuss the major ripple throughout global markets after a recent drop of $60/mt from an Asian producer.
Even though some deals have been concluded with executed letters of credit, payments have been delayed as some overseas banks encountered difficulty converting local currencies into dollars, sources said, adding another layer of bearishness.
Three major turnarounds were completed in October, which in turn has resulted in abundant supply and producers willing to negotiate lower prices.
Additionally, a drop in domestic demand in the fourth quarter of the year, weak ethylene feedstock pricing and softer global economic conditions were also applying pressure to export prices.
The one bright spot for US producers is weak ethylene feedstocks and improving production run rates, which are to keep the lid on ethylene until the first quarter of 2016.
The spot ethylene price was assessed Wednesday at 21.25 cents/lb FD USG for November delivery, but it fell as low as 18.5 cents/lb FD USG -- an 82-month low -- on October 6.
The ethylene component accounts for 47% of PVC production.
Sources talked of higher ethylene prices in the coming year, as twelve ethylene plant planned turnarounds are scheduled throughout 2016, with three starting in the later part of March.
