The trend towards a sustained increase in PVC prices was clearly noted in the fourth quarter of 2020, due to a series of concatenating factors, which led to an average differential with respect to the ethylene of 243.5 € / ton in north-western Europe.
If we consider the spot prices of PVC we can see a cost spike around week 6 of 2021 never recorded by ICIS data since 2003.
Real trading has shown prices, on the Turkish market for example, around 1600 $ / ton towards the last week of January 2021, with average values of international exports, considering the placement of FOB goods, which has undergone an increase of 69%, equal to approximately $ 900 / ton, compared to the five-year period 2015-2020.
What are the reasons for these price increases?
In Europe and the United States there have been a series of declarations of plant shutdowns due to force majeure, with the concomitant recovery of the construction sector in global level. In addition, there was a decrease in the quantities of plasticizers available, necessary for the production of the PVC recipes.
In Europe, the stoppages due to force majeure involved approximately 3 million tons of production capacity, in addition to the US producers Westlake and Formosa.
What will happen in the second and third quarters of 2021?
The expectations of maintaining current prices are supported by the fact that new production reductions are coming, for example by KEM ONE, Vynova and INOVYN, the which suggest price stability at the levels of the first quarter of 2021.
The demand for PVC in the construction sector should increase further as a result of the new energy saving pressures on which many governments are focusing. Pushes that will translate into an efficiency, for example, of homes through a greater use of new fixtures with greater thermal values.
It is assumed that in 2021 the global demand of the construction sector should grow by 3.5% compared to 2020, also driven by a new lifestyle imposed by the pandemic , where people live more indoors and, consequently, will invest more in building maintenance of their homes by taking advantage of state incentives.
Expectations for the third quarter of 2021 would see a slight decline in PVC prices, due to a global adjustment in supplies, stocks and orders, while remaining prices significantly higher than in 2020.
Automatic translation. We apologize for any inaccuracies. Original article in Italian.