European PVC Market Endures a Shine Amidst Supply Chain Challenges
- 26-Mar-2024 4:42 PM
- Journalist: Bob Duffler
The recent upward push in the PVC (Polyvinyl Chloride) prices across the European PVC market is characterized by moderate demand and a scarcity of suppliers. The European PVC supply chain facing challenges such as logistics disruptions and rerouting routes linked to the Red Sea turmoil. The PVC market trend remained largely lacklustre as the balanced regional demand and supply chain disruptions prevented any margin recovery for this timeframe.
The PVC market players expressed supply-related concerns throughout March 2024, as the Red Sea region has seen attacks by Houthi militants in Yemen, prompting multiple shipping companies to alter the routes of their vessels and causing delays in the cargo movement between Asia and Europe. In the past month, there has been a significant increase in global crude oil prices, with Brent crude futures exceeding USD 87 per barrel for the first time since October 2023. This rise was attributed to several factors, such as tighter physical markets, the extension of production cuts by OPEC+ members, heightened demand from major oil consumers globally, and escalating geopolitical tensions.
The German PVC players also opted to reduce production rates in the line of disrupted supply chains since February 2024. Additionally, Germany's GDL union, representing a significant portion of the country's train drivers, has declared another strike scheduled to commence on March 12th impacting the supply chain of the PVC industry. The announcement of this walkout occurred in the last week, marking the continuation of a protracted and contentious conflict with the state-owned primary railway operator concerning working hours and compensation. This action follows a comparable strike last week spanning from Thursday to Friday, as well as a previous walkout in local transportation earlier this month, spearheaded by the trade union Ver. di. Moreover, As the Easter holidays approached in March 2024, a specific focus shifted to German ports facing closures during weeks 13 and 14 due to the holidays.
From the demand perspective, the market participants in the PVC industry faced a reduction in the downstream production rates amidst supply disruptions during this timeframe and put a cautious stance on further changes in the downstream market-related factor, by limiting the PVC supplies in the German domestic market significantly.
As per ChemAnalyst, In Europe, the PVC market appears to face a pivotal moment in the upcoming weeks as it grapples with increasing operational costs and supply-related hurdles. While cost trends suggest a potential upward trend, buyer resistance and worries about abundant supplies present obstacles to continuous market expansion. Market participants are vigilantly observing these factors to gauge the forthcoming course of the PVC market landscape on a global scale.