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Mexico PVC November prices roll over from October

Mexico PVC November prices roll over from October2016.11.28

Prices for all grades of polyvinyl chloride (PVC) in Mexico rolled over in November from October, according to local sources, following earlier talk of potential increases of as much as $40/tonne for this month.

Last week, industry participants said that price increase initiatives were heard at $40/tonne for all grades of PVC, but later indicated that the intended hikes applied only to general purpose (GP) grades while pipe grades would roll over.

Eventually, November prices in Mexico settled flat from October, according to sources.

Demand in Mexico slowed this week as market participants adopted a wait-and-see attitude. Sources said Mexico’s markets in general were shaky this week after the US presidential election of 8 November.

Industry participants in Mexico noted uncertainty about the treatment that the country would receive under President-elect Donald Trump with regard to trade and immigration.

As a reflection of that uncertainty, the currency exchange of the Mexican peso against the US dollar fluctuated from Ps18.56/US dollar on 8 November as the US population went to the polls and before the results were announced, to Ps20.62/US dollar on 10 November.

Previously, demand in Mexico had been slow, as low crude oil prices limited government investment in public sector infrastructure projects.

In October, Mexico’s PVC prices remained flat from September, as 4 cent/lb increase initiatives were first reduced to 2 cents/lb, to eventually settle at a rollover from September.

Meanwhile, in other Latin American countries, PVC domestic prices were assessed as stable, even as regional participants noted uncertainty about the effects of the US presidential election.

Sources in Latin America, whether major or minor trade partners with the US, also adopted a wait-and-see attitude because of Trump's early campaign pronouncements regarding trade agreements, strategic alliances and immigration policy.

Market sentiment and demand remain particularly weak in Brazil, Argentina and Venezuela on longstanding economic, political and social issues. PVC prices have remained stable in these countries, in order to not further discourage already weak demand. However, prices are not likely to decline, as PVC prices in Asia have strengthened significantly in recent months.

PVC prices in Asia rose for four consecutive months from August through November by $40/tonne each month, for a total $160/tonne increase for the period.

Usually price direction in Asia points to direction for Latin America’s export offers to that region, while also suggesting the pricing trend for Latin America’s domestic markets. Lower production rates due to environmental issues in China and strong demand from India at the end of the monsoon season drove tightening supply and higher prices in Asia.

Demand in the Americas and in other regions is expected to soften towards the end of the year, as participants shave inventories to minimise tax exposure.

With weak demand in Latin America and strong demand in Asia, US PVC export offers were heard at a two-tier pricing policy, with lower-priced US offers into South America and higher-priced offers into Asia.

Source:ICIS

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