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3-digit hikes in Oct PVC offers reinforce supply-driven bullishness in Asia

by Pınar Polat -
  • 16/09/2020 (07:31)
A major Taiwanese producer announced its October PVC prices to Asian markets with a one week delay. As was expected, new offers indicated $130/ton increases on a month over month comparison owing to the global supply crunch.

The lack of PVC availability from Formosa’s and Westlake Chemical’s US facilities in the wake of Hurricane Laura, and also a PVC force majeure declared by Inovyn in Europe, have added to an already tight market amid turnarounds in Taiwan and Japan.

A source from a Japanese producer commented, “We think PVC cargoes from the US Gulf will be unavailable until the hurricane season ends.”

The major Taiwanese producer’s new PVC K67-68 offers are standing at $1020/ton CIF India and $970/ton CFR China, with no volume discount amid limited availability.

This has not only been the fifth steady increase by the major producer but also the highest price levels that have been offered by them since April 2018.

Demand-wise, buying sentiment has been improving in China and the key market India, contributing to the bullishness.

Strong economic recovery in China driven by substantial fiscal stimulus measures by the government as well as higher Yuan/USD rate have been encouraging PVC buyers in the country to make fresh purchases. In India, meanwhile, PVC demand is likely to perform better amid the subsiding monsoon season.

There has also been a cost support from feedstock. Despite the recent weakening in energy markets, spot VCM/ethylene prices on CFR China basis have maintained their stable to firmer trend recently, standing at $685/ton and $805/ton on ChemOrbis Price Wizard, respectively.

Import PVC prices hover around 6-year highs in China, India

ChemOrbis Price Index shows that the weekly averages of import PVC K67 prices on CIF India/China have gained around 19% since the firming trend kicked off in early August.

Following the latest monthly hike from Taiwan, import markets are hovering around their highest levels since September-October 2014.

The weekly averages are likely to have room for further gains in the upcoming days as most PVC suppliers are expected to follow the footsteps of the major producer.
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