Western Europe became a consistent net importer of PVC in early 2023, analysis of EU-15 trade data shows. This is a marked shift from its historical position as a net exporter and is attributed to a combination of increased import pressure, particularly from the Americas, and reduced demand and competitiveness for European producers in their traditional export markets.
The latest preliminary global trade tracker (GTT) data indicates that the EU-15 was a net PVC importer of an average 18,800 t/month in the first four months of 2023, compared with average net exports of 35,500 t/month in 2022 and 118,600 t/month in 2021 in the same time period.
Total PVC imports of 260,000t in January-April 2023 are already above total imports during the same time period in 2021 of 118,950t and 2022 of 181,100t. These were supported by a wide price gap between cif Europe imports and domestic delivered contracts during the second half of 2022, surpassing €200/t ($217.50/t) in July and €500/t in September and December. North America has been the main contributor to rising EU-15 imports this year, with north Africa and Asia-Pacific also reporting increases. Europe typically imports suspension PVC, with PVC pipe grades (k-value 65-67) forming the bulk.
Total EU-15 PVC exports in January-April 2023 did not exceed those of the same time period in 2021 and 2022, which was mainly reflective of import challenges into Egypt, weaker requirements from Turkey and inaccessible Russian demand for PVC paste-grades because of sanctions. Demand for PVC paste-grade in Russia was 130,000-140,000t in 2021, with European exports of PVC paste-grades accounting for almost 95pc of Russian supply. The EU-15 exported a total of 184,850t of PVC up to the end of April 2023, compared with a respective 308,150t and 271,150t during the same time period in 2021 and 2022.
From a buyer's perspective, the incentive to increase imports has been clear, only limited by volume commitments to European suppliers and uncertainty about their own demand in a weakening market environment. The Argus PVC pipe-grade and paste-grade contract markers were finalised at a respective €1,310/t and €1,515/t in May, down by €300/t and €200/t since December 2022, but despite this, PVC contract prices failed to match those in the import market.
What's in store for 2H 2023?
The trend towards net imports of PVC is unlikely to let up in the remainder of 2023, despite a narrowing gap between domestic contract and import prices and lower demand expectations from the construction and automotive sectors.
PVC pipe-grade imports are likely to ease, but the European market remains exposed to a combination of higher PVC production costs, lower production rates and plant closures in central and eastern Europe, which will continue to support imports.
Traders seized on a likely floor for US export prices to import additional PVC volumes, with most scheduled to arrive between July and August, which could allow traders to take advantage of any post-summer demand recovery. Furthermore, domestic production cuts and ongoing uncertainty over long-term trade with Egypt and Russia will probably maintain EU-15 exports steady within low levels for the remainder of 2023.
Recently cheaper import arrivals, which continued to play in favour of buyers during 2023 contract price negotiations, raised questions in the market on the possible implementation of anti-dumping duties on PVC imports into Europe. European producers may question the gap between US export and domestic contract prices, but it is too early to say whether a formal investigation will be launched by the European Commission.
