November prices for Asian PVC decline 2.5% month-over-month, 13.6% year-over-year to average US$879.60/tonne CFR FEA on concerns over short supply of VCM; fire at Tosoh's Nanyo, Japan, plant could take 475,000 tonnes of VCM out of supply

LOS ANGELES , December 2, 2011 () – Prices for November PVC in Asia dropped 2.5% month-over-month and 13.6% year-over-year to average $879.60/tonne cost and freight Far East Asia, Platts reported Dec. 2.

For the first two weeks of November, PVC prices remained at US$865/tonne CFR FEA. At the start of the second half of November, shorter supply of feedstock vinyl chloride monomer started to drive prices up.

The shortness in supply was attributable to a fire at Tosoh Corp.'s Nanyo, Japan, complex, Platts reported. A Nov. 13 explosion at the complex forced Tosoh to shutter its No. 2 and No. 3 VCM plants, which have capacities of 550,000 tonnes/year and 400,000 tonnes/year, respectively.

It may be another six months before the plants can resume normal operations, which would result in a total of 475,000 tonnes of VCM being taken out of the market, Platts reported, citing sources.

The VCM-PVC spread in November narrowed by $21.65/tonne month-over-month to $115.85/tonne. Break-even for PVC producers is generally $150/tonne, Platts noted. Consequently, PVC producers who have been buying feedstock from Tosoh have been forced to push operating rates from 70%-80% down to 60%-70%. PVC producers with integrated complexes can source their own feedstocks and don't need to scale back operations to protect margins, Platts noted.

The primary source of this article is Platts, New York, New York, Dec. 2, 2011.

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