US PVC export prices rise on tighter global supply

Market: Petrochemicals
31/05/24

US polyvinyl chloride (PVC) export prices have risen by $60/metric tonne on average in the last few weeks as tighter global supply and freight challenges outweigh rising domestic production.

PVC export prices settled this week at $770-800/t fas Houston, touching $800/t for the first time since September 2023 and up from $720-730/t fas during the first week of May.

US producers have raised operating rates following months of maintenance and unplanned outages, but that has had little effect on global supplies as some US producers say domestic sales volumes also have risen, tightening producers' inventories.

At the same time, Chinese PVC producers have been reducing exports, specifically to Africa, India, and south Asia. Market participants claim freight rates from Asia are becoming too expensive, making Chinese PVC exports less competitive compared to supply from the US and Europe. This has allowed US producers to sell into previously competitive regions at higher prices.

US export prices also have benefited from a force majeure declaration and shutdown at Orbia's Altamira PVC plant in Tamaulipas, Mexico. The 690,000 t/yr plant has been down since 5 May due to water shortages, and Orbia has made no public announcement on when the plant will resume operations. As traders and buyers in Latin America organized June shipments, the weight of the shutdown came into effect.

Whether Orbia reallocates some supply from its Colombian operations into Central America remains to be seen, but US exporters expect Latin America to be increasingly tight on PVC either way. The lack of affordable resin from Asia due to freight rates further limits alternative supply options.

US producers are unsure how long the elevated PVC pricing will last or if prices could rise even further in the weeks ahead. A few buyers are holding out on spot purchases with the expectation of prices falling as the summer progresses, however some volumes have been exported to Africa at a $800/t fas price equivalent, indicating that there is support for higher prices in the interim.

By Rachel McGuire and Aaron May

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