US PVC export prices rise in early June

Average prices for US polyvinyl chloride (PVC) exports have continued to rise in recent weeks, increasing by $50/metric tonne (t) in just the last two weeks as US exporters expand market share in key regions.

Argus assessed export prices in the week ending 14 June between $820-850/t fas Houston. In addition to the reflect the recent price increase, this week's price range is $110/t higher than the start of May, when PVC prices first started to rise.

That early May rise in prices coincided with the shutdown of Orbia's 690,000t/yr PVC plant in Altamira, Mexico. The plant has been down since 5 May due to water shortages from an ongoing drought in the region. There has been no public announcement on when operations will resume and there is no clear outlook on when the drought will end, but some market participants suspect it could last deep into the summer.

At the same time, Asian producers continue to be challenged by rising freight rates and tight vessel availability, making their PVC offerings less competitive to key markets. In particular, US traders have said exports to Africa, India, and south Asia from northeast Asia have been decreasing.

On 10 June, Korean PVC producer LG Chem sent out a letter to its customers informing them about delivery delays due to logistical challenges. In the letter, the company noted a steep rise in ocean freight costs because shipping lines are keeping vessel space significantly tight. The letter also told customers that they may need to help partially cover the added shipping costs by paying an additional $100/t for shipments to be delivered on time, as shipping companies were only agreeing to transport cargo that was covered by these higher upfront costs.

US exporters have taken advantage of the supply gaps created from those two issues, and several traders in recent weeks have said buyers around the world would look to the US going forward to provide adequate supply. The result has meant that even with the increase in prices, US exporters have continued to gain traction in Africa and Asia, while shoring up market share in the Americas.

While the operating rates in the US have improved, the industry as a whole is still not running at full rates. Domestic demand is still strong according to producers and buyers in the US, a dynamic which could keep export availability tighter in the weeks ahead. This has led some traders to expect further price increases for export volumes in the weeks ahead.

By Aaron May and Tasani Stokes