PVC margins up by 3%

Aftab Ahmed

Islamabad: PVC-Ethylene margin continues rising as it rose 3% week on week (WoW) to USS803 per ton hitting a three-week high.

Margin expanded on the back of a 2%WoW rise in PVC prices, currently hovering at US$1,380/ton driven by a global supply shortage and bullish trend in crude oil prices.

While Ethylene prices also rose by 2% on weekly basis to stand at USS1,155/ton or account of rising crude prices and healthy operating rates in downstream sectors.

Thus, margins expanded by US$20/ton WoW primarily due to higher PVC prices. So far, in the ongoing quarter, PVC-Ethylene margin is still on the higher side, averaging around USS800/ton, up 15% from the average USS690 during the preceding quarter.

As per calculations, any USS10 per ton change in primary margin alter annualized EPS by around Re0.3 assuming new capacity remains unutilized. We maintain ‘Buy’ stance on EPCL- our top pick in the chemical sector, Sherman Research said in a note.