After hitting a three-year low last month and remaining stagnant for the initial two months of the year, the European PVC (Poly Vinyl Chloride) market witnessed a marginal rebound in April 2024. It appears that prices have continued to rise into the second half of April, with increases surpassing half of the ethylene hike. Some of the European suppliers have already proposed increases matching the monomer hike to recover margins. A producer source emphasized the expected rise in PVC prices due to higher feedstock prices, hinting at the possibility of diverting excess supply to export outlets in Türkiye and North Africa if initial hike requests face resistance.

Producers are now reentering the market with fresh attempts to raise prices, striving to exceed half of the Ethylene settlement or potentially mirror the entire Ethylene hike to focus on margin recovery. However, participants are indicating that the present market dynamics may not be conducive to achieving margin recovery targets. Most European PVC suppliers have delayed their new offers due to a holiday lull and the delayed settlement of Ethylene contracts.

From the PVC demand perspective, the downstream purchasing activity is expected to remain sluggish, especially in sectors like automotive and construction, which are experiencing slower consumption during this timeframe. With the high season yet to commence, market players are closely monitoring demand trends in the regional market. The current minimal inventory procurement sentiments in the Eurozone could hinder significant margin recovery efforts, making it challenging to implement hikes ahead of the cost pressure pass-through from the upstream Ethylene.

Hence, despite output curbs and maintenance shutdowns in early Q2, Vestolit at Marl in Germany underwent a maintenance turnaround for 10 days in the first half of April 2024, the overall PVC supply has been sufficient to meet regional and export demand. However, reduced import volumes and some production interruptions within the region haven't significantly impacted overall supply. Producers, cautious of tight margins, are operating at reduced rates to prevent further erosion.

Prompt US PVC cargos continue to be competitively priced, posing a challenge to regional suppliers. The availability of US PVC at lower prices could make it difficult for regional suppliers to enhance their margins. Growing competition among sellers in export markets, coupled with ongoing antidumping inquiries, has further intensified pricing pressures in the PVC market.

As per ChemAnalyst, PVC prices are likely to gain slow momentum in the Eurozone, as negotiations continue and market dynamics evolve, market participants are closely watching for further developments in the PVC market, especially regarding demand recovery and margin stabilization amidst surged upstream Ethylene price trend.