Vinyls - vinyls global monthly market overview August 2019

Following a 2 cent/lb hike in July, domestic US August PVC contract prices are looking down by 1 cent/lb on weaker demand. The problem? Ethylene. Unplanned outages upstream have had feedstock ethylene prices push higher by several cents. Importantly, the concentration of offline ethylene capacity has been in Louisiana causing ethylene premiums there to rise up to 8 cent/lb over Mt Belvieu. About 48% of US EDC capacity is in Louisiana. Globally, Asian turnarounds have lent some support to PVC spot prices. Weak macroeconomic factors have stymied demand, though, and in Europe, spot prices have edged down. Our outlook for PVC is little changed. Caustic soda markets continue long. Demand for US exports in Brazil has provided little support to prices, this despite export volumes skyrocketing in June. Alumina capacity taken offline in Jamaica will only serve to add length to the market, and we anticipate several months still before caustic soda markets move towards a more balanced position.