Spot
Caustic soda spot prices have fallen $20/dmt in the Mediterranean, to $330-350/tonne FOB MED, because of weak demand and increased supply.
Lengthening availability in the Mediterranean is the result of higher operating rates at plants in the Black Sea, following the resolution of upstream ethylene problems in the area (ethylene is the feedstock for caustic soda’s co-product chlorine). Material from the Black Sea has been flooding in to the Mediterranean for the past few weeks, sources said, leading to oversupply.
Mediterranean demand is weak because of the approach of traditional August holiday closures, coupled with declining macroeconomic conditions which have limited downstream demand – particularly among smaller users.
Spot prices in northwest Europe have fallen by $20/tonne at the top end of the range, to $350-370/dmt FOB NWE, also because of declining demand. Nevertheless, consumption in northwest Europe is higher than in southern Europe because of stronger GDP growth across the region, particularly in Germany.
Some buyers say caustic soda prices are currently too high for end-users to make attractive margins, particularly in southern Europe, which is also limiting consumption.
Polyvinyl Chloride (PVC)
European polyvinyl chloride (PVC) players are not expecting further price falls in August contracts because the upstream ethylene August contract price unexpectedly rose by €30/tonne from July.
Buyers are targeting a rollover for August PVC prices, arguing that weak demand will not support price hikes, although they expect the higher ethylene cost to be transferred in to the PVC market in September, when demand typically rebounds following summer closures.
Consumption is low because of deteriorating macroeconomic conditions in southern Europe, which is limiting activity in the major downstream construction sector, and the approach of traditional end-user shutdowns in August.
Producers, however, argue that margins are too weak to delay passing the extra ethylene cost in to the market until September.
Spot prices have fallen by €10/tonne, to €840-860/tonne FD EU, because of weak demand. Numbers as low as €830/tonne have been seen in the market, but were not viewed representative by the majority. One buyer viewed spot values as low as €720/tonne FD but added that this was for lower-quality material and not representative of the bulk of trade. Some producers saw values as high as €880/tonne but, again, this was not considered representative by the majority.
Consumption is weakest in southern Europe because of continued fears over macroeconomic conditions, coupled with traditional August holiday closures.
Production
Ineos ChlorVinyls is due to undergo planned maintenance at its chlor-alkali plant in Rafnes, Norway, in three weeks time, it is believed. The maintenance is due to last one week. The plant has a caustic soda nameplate capacity of 293,000 tonnes/year.
The European Commission has cleared INEOS ChlorVinyls’ proposed acquisition of Belgium-based Tessenderlo’s suspension polyvinyl chloride (SPVC) business, it said on Tuesday.
The Commission added that the proposed transaction would not significantly modify the structure of the affected markets.
SPVC is a resin used in pipes, window profiles and other industrial applications.
On 14 June, it was announced that INEOS ChlorVinyls, part of UK-based Kerling, a leading manufacturer of PVC and caustic soda in Europe, was set to buy Tessenderlo's PVC and chlor-alkali businesses for €110m ($157m) on a cash-free, debt-free basis.
After the transaction, Tessenderlo will exit from the commodities market and focus on its sulphate, akiolis and gelatine businesses, and its remaining plastics pipe systems and water treatment segment.
PCC Rokita SA was due to restart its 140,000 tonne/year plant in Brzeg Dolny, Poland, on 18/19 July, following a three-week planned outage. The company could not be reached for an update on the production situation this week.
Regions
In the US, the chlor-alkali operating rate for June was 92%, slightly higher than May, according to figures from the Chlorine Institute released on 25 July.
Sources said the high operating rate reflects healthy export demand for chlor-alkalis and no production issues during June.
Asian liquid caustic soda prices fell $20-30/tonne this week, to $370-400/tonne FOB N.E. Asia, because of low demand.
Shipping
FIXTURES:
7,000 tonnes caustic soda solution Rotterdam / New York 1-10 August $31/tonne
3,000 tonnes caustic soda lye Tarragona / Seville 23-26 July €19-20/tonne
15,000 tonnes caustic soda solution Rafnes / USEC 10-15 July $30/tonne
ENQUIRIES:
3,000 tonnes caustic soda solution Black Sea / south Spain ppt onwards
9,500 tonnes caustic soda solution Dahej / Durban 1H August
