The Peruvian polyvinyl chloride market flipped into backwardation for April as buyers took long positions in anticipation of lengthening supply in second-quarter 2013, sources said Thursday.
"Consumers are buying only the minimum amount of resin. They're waiting and looking for lower prices," a Latin American producer said.
Many market players in Peru were heard taking wait-and-see positions during March as at least four turnarounds were scheduled by US producers from February through March.
Competing perspectives on whether Peruvian prices would decrease following the turnarounds on improved availability from the US or whether strong US domestic demand would absorb the material after the turnaround season prompted market participants to stay on the sidelines and await US offers for April.
Although no firm offers from US producers were heard yet for April, at least two US-origin deals were heard for April delivery, the first at 150 mt for $1,120 CFR Peru and the second for an undisclosed cargo size at $1,050/mt CIF Peru. Ocean freight from the US to Peru was estimated by sources at $90-100/mt.
"This could be pre-selling by traders to lower their inventory levels before the price falls," a trader said.
The 20-40 day assessment reached a 2013 high of $1,140-$1,150/mt CFR Peru on February 27, slipping $20 to $1,120-1,130/mt CFR Peru on Wednesday, according to Platts data.
"This hike in PVC happens every year and then retreats," the trader said.
A second trader said lackluster demand and subsequent price decreases in the Middle East to sub-$1,000/mt levels indicated a global shift to lower PVC pricing.
In 2012, the CFR Peru assessment reached a peak of $1,125/mt on April 25 and fell to $845/mt on June 20 on seasonal sluggish demand and downward pressure from Asia, according to Platts data.
