Northwest European domestic prices for polyvinyl chloride (PVC) gained €25/tonne ($35/tonne) for May, as a result of tightening supply and renewed buying interest, market sources said on Friday. The average price in northwest Europe was pegged at €725-730/tonne FD (free delivered) as a result, although there was some regional variation. At the beginning of May, the majority of sellers conceded that contracts had been settled at plus-€20/tonne, but producers said increasing sales towards the end of the month had enabled them to target hikes of €30/tonne, which averaged out at €25/tonne. However, highs of €40/tonne were possible in Italy as local players suffered supply constraints owing to the collapse of Vinyls Italia, which was reported to have ceased production, although there was no confirmation of this at source. Northwest European producers reported that larger hikes of €40/tonnne were also possible in central and eastern Europe as domestic producers took a firm stance on pricing, offering an increment of €50/tonne on a take-it-or-leave-it basis. “Buyers have little choice but to accept hikes,” said a key producer. “There is no margin left in PVC production anymore because of the falls in [upstream] caustic soda [prices] ... producers can just simply stop producing and not offer.” “We will offer a hike of €120/tonne for June,” confirmed another northwest European producer, before explaining “it is necessary in order to firm margin and bring back capacity to accommodate the change in demand”. However, while numerous players acknowledged that supply was tightening, there was some debate as to whether the move represented a change in fundamentals or was simply initial restocking. A buyer said that sellers were attempting to talk up the market, saying that demand, despite some recent recover, still remained around 20-30% below May 2008 levels. “Suppliers are in for a slow summer,” the source said. “This is traditionally the strongest time for the PVC market, and there has not been any significant pick up...[producers] are approaching the time when they need to re-negotiate their credit lines, and they need to sell now in order to have some cash flow.” Exacerbating the increasing tightness in the market were several production issues in the upstream vinyl chloride monomer (VCM) market. Key producer INEOS confirmed that it was operating at reduced rates at its 330,000 tonne/year plant in Schkopau, Germany, and was ramping up production following a shutdown at its 300,000 tonne/year plant in Runcorn, UK. INEOS was also experiencing technical issues at its chlor-alkali facilities in Rafnes, Norway, and Wilhelmshaven in Germany, a company source said.（ICIS)