PVC Prices Surge Amid Supply Constraints and Geopolitical Tensions; Market Outlook for September 2024

Price

• PP Raffia: ₹94.50/kg, down by ₹0.50, Ex-Godown
• PP Film: ₹100/kg, stable, Ex-Godown
• PP CP: ₹99.75/kg, stable, Ex-Godown
• PP Lamination: ₹104.25/kg, stable, Ex-Godown
• LLDPE: ₹87/kg, down by ₹0.50, Ex-Mundra/Bhiwandi
• LDPE: ₹120/kg, stable, Ex-Mundra/Bhiwandi
• HDPE PE100 Natural: ₹92.5/kg, down by ₹0.50, Ex-Mundra/Bhiwandi
• HDPE PE100 Black: ₹93.5/kg, down by ₹0.50, Ex-Mundra/Bhiwandi
• HDPE HM: ₹92/kg, down by ₹1, Ex-Mundra/Bhiwandi
• HD Blow Molding: ₹94/kg, stable, Ex-Mundra/Bhiwandi
• Low K (P700/TH700): ₹80.25, up by ₹1.25, Ex-Nhava Sheva/Mundra
• LG LS100H: ₹76.25, up by ₹1.25, Ex-Mundra/Bhiwandi

Demand and Supply

• PVC prices in the German market have been consistently rising due to moderate demand in the downstream construction sector and low inventories.
• Supply contraction has enabled manufacturers and sellers to maintain higher prices in the short term. Production reductions and elevated upstream Ethylene costs, combined with port strikes, have led to constrained supplies.
• Additionally, flooding at a supplier is causing production delays and further impacting profit margins and PVC prices in Germany.
• From the supply chain perspective, storms and oil market turmoil are contributing to rising PVC prices. Heavy rainfall, strong winds, and potential flooding are expected to impact low-lying areas and unstable slopes, causing further challenges.
• PVC prices in the European market are expected to continue increasing due to anticipated surges in upstream crude oil prices and rising Ethylene costs.
• Geopolitical tensions may also affect production rates in the coming weeks. The market outlook suggests that larger price hikes could be more feasible in September 2024 as the market progresses through the summer.

News

• The annual rate of inflation based on WPI was recorded at 2.04% in July 2024, down from 3.36% in June 2024.
• Ningbo Zhoushan port terminal has resumed operations after being temporarily shut due to an explosion aboard a container vessel.
• Sinopec-SK Wuhan Petrochemical plans to shut its Polypropylene (PP) Plant for maintenance from August 18, 2024, to August 31, 2024, in Wuhan, Hubei, China.

Expert's Opinion

• It is expected that converters will continue to manage smaller polymer stocks than usual to maintain purchasing flexibility and cash flow, given the current challenges of fluctuating supply, demand, and prices.