Viewpoint: EU PVC struggles to remain cost competitive

Spanish Market: Chemicals, Petrochemicals
23/12/22

The European polyvinyl chloride (PVC) industry is ending 2022 managing a potent cocktail of high inventories, elevated production costs, competitively-priced imports and low demand. Given uncertainty about 2023 pricing and output, the region's producers are choosing to lower operating rates across the vinyls chain, although the duration of such measures is unclear given the ever-changing nature of the energy crisis.

While supply availability of suspension PVC (s-PVC) and paste PVC (e-PVC) improved during 2022, rising gas and electricity costs supported higher contract prices in Europe during the first half of the year. The Argus PVC pipe-grade and paste-grade northwest Europe contract assessments hit records of €2,040/t and €2,170/t respectively in April, although there was then a gradual decline in demand during the second half of the year as buyers became more cautious about raw material costs, stock positions and underlying demand.

The home renovation and construction segments became more susceptible to higher raw material and utility costs, labour shortages and rising interest rates, creating a sense of pessimism over the long-term growth of PVC demand. Furthermore, the flow of lower-priced finished-goods imports to Europe, such as luxury vinyl tiles from Asia-Pacific made from s-PVC, became problematic for smaller domestic converters. Larger PVC buyers said similar concerns will arise should such imports flow more frequently in 2023.

The Argus preliminary PVC pipe-grade and paste-grade northwest Europe contract marker assessments for December are at €1,610/t and €1,725/t, respective €430/t and €445/t drops since April. But Europe remains the highest-priced region globally, mainly because of elevated electricity costs. Ethylene costs mostly mirrored price declines in crude and naphtha in the second half of 2022, and are unlikely to rise significantly in the short term given demand concerns, lower upstream oil prices and upcoming start-ups in global ethylene capacity.

Competitively-priced import offers into Europe from the US, Turkey, Egypt, South Korea and southeast Asia have weakened the spot market for s-PVC and exposed contract prices. Contract volume commitments and volatile demand requirements have limited buyers' ability to take advantage of such imports in 2022, but this could change as some contracts are reset in 2023.

Lower e-PVC exports to Russia, following sanctions related to Moscow's invasion of Ukraine, contributed to a prolonged supply glut in Europe that is leaving many domestic producers to look for new export opportunities in the US and Asia-Pacific. This is unlikely given the unfavourable prices.

As a result, PVC producers in Europe are reducing operating rates in order to manage inventories and the lower demand. Chlorine capacity utilisation in Europe fell from 69pc to 58pc between July and October, but some stability has been seen more recently because of higher netbacks on caustic soda, a byproduct of chlorine production. This support is beginning to crumble, as high prices cause caustic soda demand erosion. Caustic soda prices remain historically high, but weaker demand and imports may continue to undermine domestic producers' positions should power prices remain elevated in 2023.

With vinyl production rates and stock positions being adjusted towards a lower and uncertain short-term demand outlook, the chance of further PVC price volatility is probable should stronger-than-expected demand and restocking efforts coincide with tighter regional supply. Talks in the EU over price caps for natural gas are easing such worries, but with EU member states discussing different approaches the cost effectiveness of PVC production remains unclear among different European countries.

By Michael Vitiello

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07/04/25

Flooding on US rivers mires barge transit

Houston, 7 April (Argus) — Barge transit slowed across the Arkansas, Ohio and lower Mississippi rivers over the weekend because of flooding, which prompted the US Army Corps of Engineers (Corps) to close locks and issue transit restrictions along the waterways. The Corps advised all small craft to limit or halt transit on the McClellan-Kerr Arkansas River Navigation System (MCKARNS) in Arkansas because flows reached above 200,000 cubic feet per second (cfs), nearly three times the high-water flow. The heavy flow is expected to persist throughout the week, posing risks to those transiting the river system, said the Corps. Some barges have halted movement on the river, temporarily miring fertilizer resupply efforts in Arkansas and Oklahoma in the middle of the urea application season. The Corps forecasts high flows to continue into Friday, and the National Weather Service predicts several locations along the MCKARNS will maintain a moderate to minor flood stage into Friday as well. Both the Arthur V Ormond Lock and the Toad Suck Ferry Lock, upriver from Little Rock, Arkansas, shut on 6 April because of the high flows. Flows along the Little Rock Corps district reached 271,600cfs on 7 April. The Corps forecasts high flows to continue into Friday. Ohio and lower Mississippi rivers The Corps restricted barge transit between Cincinnati, Ohio, and Cairo, Illinois, on the Ohio River to mitigate barge transportation risks, with the Corps closing two locks on the Ohio River on 6 April and potentially four more in the coming days. Major barge carrier American Commercial Barge Line (ACBL) anticipates dock and fleeting operations will be suspended at certain locations along the Mississippi and Ohio rivers as a result of the flooding. NWS forecasters anticipate major flooding levels to persist through the following week. Barge carriers also expect a backlog of up to two weeks in the region. To alleviate flooding at Cairo, Illinois, where the Ohio and Mississippi Rivers meet, the Corps increased water releases at the Barkley Dam on the Cumberland River and the Kentucky Dam on the Tennessee River. The Markland Lock, downriver from Cincinnati, Ohio, and the Newburgh lock near Owensboro, Kentucky, closed on 6 April. The Corps expects the full closure to remain until each location reaches its crest of nearly 57ft, which could occur on 8 or 9 April, according to the National Weather Service (NWS). Around 50 vessels or more are waiting to transit each lock, according to the Lock Status Report published by the Corps on 7 April. The Corps also shut a chamber at both Cannelton and McAlpine locks. The John T Myers and Smithland locks may close on 7 April as well, the Corps said. The Olmsted Lock, the final lock before the Ohio and Mississippi rivers, will require a 3mph limit for any traffic passing through. The NWS expects roughly 10-15 inches of precipitation fell along the Ohio and Mississippi River valleys earlier this month, inducing severe flooding across the Ohio and Mississippi River valleys. A preliminary estimate from AccuWeather stated an estimated loss of $80-90bn in damages from the extreme flooding. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US PE exports could lose market share on new tariffs

04/04/25

US PE exports could lose market share on new tariffs

Houston, 4 April (Argus) — US polyethylene (PE) traders are concerned that retaliatory tariffs announced this week by China and being considered by the European Union will close the door to two of the biggest markets for US resin exports. China announced today it will impose a 34pc tariff on all imports from the US from 10 April, while the EU is in the process of finalizing countermeasures this week, all in response to widespread tariffs announced by US president Donald Trump on 2 April. "This closes off China," said one US export trader. "And it looks like a full stop in Europe too." The US exported 2.4mn t of PE to China in 2024, representing 16.8pc of total US PE exports, according to data from Global Trade Tracker. Exports to the EU totaled 2.26mn t, representing 15pc of all US exports. US PE exports in 2024 totaled 14.2mn t, with exports representing 47pc of total sales last year. During the previous Trump administration, China provided waivers for certain tariffs, including on some PE grades. Some market participants have said that may be possible again, while others have said they see it as less likely, as China has become more self-sufficient, and has other alternative suppliers, such as the Middle East. "(China) is in a better position to impose tariffs on PE today than they were in 2018," said one North American PE producer. It will be difficult for US producers to make up for the loss of market share in China and the EU, which could result in producers needing to slow operating rates. For now, markets in Africa, Latin America and southeast Asia, remain open for US material, but traders are concerned that other top trading partners could also retaliate against the US, closing off additional markets. "There are not enough places to go with this stuff," the trader said. With limited export opportunities, the North American PE producer agreed that production would likely need to slow to keep material from backing up in the domestic market and causing domestic prices to fall. "The last time we saw tariff action from China, there was an impact on the domestic market," the producer said. "Pricing went down." For this week, US PE export pricing has held fairly steady as the market absorbs the tariff news. But market participants said they believe prices could move down in the coming weeks if production is not slowed. By Michelle Klump Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Tariffs and their impact larger than expected: Powell

04/04/25

Tariffs and their impact larger than expected: Powell

New York, 4 April (Argus) — Federal Reserve chairman Jerome Powell said today tariff increases unveiled by US president Donald Trump will be "significantly larger" than expected, as will the expected economic fallout. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth," Powell said today at the Society for Advancing Business Editing and Writing's annual conference in Arlington, Virginia. The central bank will continue to carefully monitor incoming data to assess the outlook and the balance of risks, he said. "We're well positioned to wait for greater clarity before considering any adjustments to our policy stance," Powell added. "It is too soon to say what will be the appropriate path for monetary policy." As of 1pm ET today, Fed funds futures markets are pricing in 29pc odds of a quarter point cut by the Federal Reserve at its next meeting in May and 99pc odds of at least a quarter point rate cut in June. Earlier in the day the June odds were at 100pc. The Fed chairman spoke after trillions of dollars in value were wiped off stock markets around the world and crude prices plummeted following Trump's rollout of across-the-board tariffs earlier in the week. Just before his appearance, Trump pressed Powell in a post on his social media platform to "STOP PLAYING POLITICS!" and cut interest rates without delay. A closely-watched government report showed the US added a greater-than-expected 228,000 jobs in March , showing hiring was picking up last month. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US-origin PE, PP appear in provisional UK tariff list

04/04/25

US-origin PE, PP appear in provisional UK tariff list

London, 4 April (Argus) — The UK government has included polyethylene (PE) and polypropylene (PP) imports from the US in a list of products that could be subject to retaliatory tariffs. All PE and PP HS codes appear on the list published on 3 April. The document is at this stage for consultation and only indicative of goods that could fall under the review. No details are known so far on the tariff levels nor when they could be implemented, although the deadline for responses is 1 May. This comes after US President Donald Trump's announcement on 2 April of a minimum 10pc global levy on imports from all trade partners, in addition to existing levies. The tariff on imports from the UK is 10pc, and from the EU 20pc. The UK imported 173,000t of PE from the US in 2024 and 7,000t of PP. LLDPE under HS code 390140 was omitted from the UK tariff list, a grade which accounts for 45pc of all UK PE imports from the US. This means that 96,000t of PE would fall under the provisional tariffs. The UK has "a range of levers" at its disposal for responding to the US' levies and will continue speaking with Washington on an "economic prosperity deal", UK prime minister Keir Starmer said on 3 April. The import tariffs imposed by the US on 2 April present a "significant risk" to the global economy, according to the IMF . President Trump is holding firm on the tariffs , even as US stock prices tumble, but other US politicians are less convinced. The US Senate is attempting to block tariffs , but legislative action is unlikely to become law. By Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

New tariffs could upend US tallow imports

03/04/25

New tariffs could upend US tallow imports

New York, 3 April (Argus) — New US tariffs on nearly all foreign products could deter further imports of beef tallow, a fast-rising biofuel feedstock and food ingredient that had until now largely evaded President Donald Trump's efforts to reshape global trade. Tallow was the most used feedstock for US biomass-based diesel production in January for the first month ever, with consumption by pound rising month to month despite sharp declines in actual biorefining and in use of competing feedstocks. The beef byproduct benefits from US policies, including a new federal tax credit known as "45Z", that offer greater subsidies to fuel derived from waste than fuel derived from first-generation crops. Much of that tallow is sourced domestically, but the US also imported more than 880,000t of tallow last year, up 29pc from just two years earlier. The majority of those imports last year came from Brazil, which until now has faced a small 0.43¢/kg (19.5¢/lb) tariff, and from Australia, which was exempt from any tallow-specific tariffs under a free trade agreement with US. But starting on 5 April, both countries will be subject to at least the new 10pc charge on foreign imports. There are some carveouts from tariffs for certain energy products, but animal fats are not included. Some other major suppliers — like Argentina, Uruguay, and New Zealand — will soon have new tariffs in place too, although tallow from Canada is for now unaffected because it is covered by the US-Mexico-Canada free trade agreement. Brazil tallow shipments to the US totaled around 300,000t in 2024, marking an all-time high, but tallow shipments during the fourth quarter of 2024 fell under the 2023 levels as uncertainty about future tax policy slowed buying interest. Feedstock demand in general in the US has remained muted to start this year because of poor biofuel production margins, and that has extended to global tallow flows. Tallow suppliers in Brazil for instance were already experiencing decreased interest from US producers before tariffs. Brazil tallow prices for export last closed at $1,080/t on 28 March, rising about 4pc year-to-date amid support from the 45Z guidance and aid from Brazil's growing biodiesel industry, which is paying a hefty premium for tallow compared to exports. While the large majority of Brazilian tallow exports end up in the US, Australian suppliers have more flexibility and could send more volume to Singapore instead if tariffs deter US buyers. Export prices out of Australia peaked this year at $1,185/t on 4 March but have since trended lower to last close at $1,050/t on 1 April. In general, market participants say international tallow suppliers would have to drop offers to keep trade flows intact. Other policy shifts affect flows Even as US farm groups clamored for more muscular foreign feedstock limits over much of the last year, tallow had until now largely dodged any significant restrictions. Recent US guidance around 45Z treats all tallow, whether produced in the US or shipped long distances to reach the US, the same. Other foreign feedstocks were treated more harshly, with the same guidance providing no pathway at all for road fuels from foreign used cooking oil and also pinning the carbon intensity of canola oil — largely from Canada — as generally too high to claim any subsidy. But tariffs on major suppliers of tallow to the US, and the threat of additional charges if countries retaliate, could give refiners pause. Demand could rise for domestic animal fats or alternatively for domestic vegetable oils that can also be refined into fuel, especially if retaliatory tariffs cut off global markets for US farm products like soybean oil. There is also risk if Republicans in the Trump administration or Congress reshape rules around 45Z to penalize foreign feedstocks. At the same time, a minimum 10pc charge for tallow outside North America is a more manageable price to pay compared to other feedstocks — including a collection of charges amounting to a possible 69.5pc tax on Chinese used cooking oil. And if the US sets biofuel blend mandates as high as some oil and farm groups are pushing , strong demand could leave producers with little choice but to continue importing at least some feedstock from abroad to continue making fuel. Not all US renewable diesel producers will be equally impacted by tariffs either. Diamond Green Diesel operates Gulf Coast biorefineries in foreign-trade zones, which allow companies to avoid tariffs on foreign inputs for products that are ultimately exported. Biofuel producers in these zones could theoretically refine foreign tallow, claim a 45Z subsidy, and avoid feedstock tariffs as long as they ship the fuel abroad. Jurisdictions like the EU and UK, where sustainable aviation fuel mandates took effect this year, are attractive destinations. And there is still strong demand from the US food sector, with edible tallow prices in Chicago up 18pc so far this year. Trump allies, including his top health official, have pushed tallow as an alternative to seed oils. By Cole Martin and Jamuna Gautam Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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