A look back at Asian PVC markets in 2018: Taiwanese major continues to take the lead

A major Taiwanese producer’s monthly pricing has continued to shape the Asian PVC market trend throughout 2018 while parity issues have also gained prominence amid the trade war between China and the US.

Taiwanese major sought hikes in two third of the year

A major Taiwanese producer has approached regional PVC markets mostly with hikes throughout 2018, mainly citing its limited allocations.

The first time when the major producer elected to adopt a softer pricing was for the months of May and June, which was in line with slow demand ahead of the monsoon season in India.

The second time was for the months of October and November, which was driven by disappointing post-monsoon demand in India along with falling local currencies at that time. The emergence of competitive US offers in China and Southeast Asia also contributed to the lower offers.

$900/ton CIF threshold is critical both for China and India

According to the weekly average of ChemOrbis Price Index, import PVC prices hovered well above the $900/ton threshold for the most part of the year in India and China, the world’s two largest PVC importers. In India, the weekly average even moved above the $1000/ton threshold for a short period in the early months. It was the last quarter when average prices in both countries moved under $900/ton.

Post-monsoon demand failed to meet expectations in India

In India, the PVC market defied the end of the monsoon season this year as demand for import cargoes remained mostly muted until late October. This was mainly attributed to the currency fluctuations, which pushed buyers to refrain from making import purchases in order to avoid risks.

Weakening currencies lent support to local markets

The trade war between China and the US weighed on regional currencies in Southeast Asia and put upwards pressure on local markets, particularly in the rainy season. In early September, the Malaysian ringgit closed at its nine-month low against the US dollar and the Indonesian rupiah fell to its weakest level against the US dollar in more than 20 years.

A similar case was also in place in India, when the Indian rupee sank to a record low against the US dollar, halting interest for import cargoes even after the end of the low season.

US PVC offered competitive edge in China, Southeast Asia

US PVC was offered at competitive levels across Southeast Asia and China in September. The influx of US cargoes pulled the market further down particularly in China as they were around $100/ton lower in comparison to the Asian origins.

China’s decision to remove US PVC from the list was also cited as a reason for increased attention for the US origin in the region.

In the early phases of the China-US trade war, China’s Ministry of Commerce published a revised list of 333 US products including PVC that are due to be subject to an additional 25% tariff and soon afterwards the Chinese government removed PVC from this list.

Explosion leads to security checks in China, tightness pushed local markets up

Following a massive explosion that occurred outside Hebei Shenghua’s PVC facility in Hebei, China in late November, the Chinese government started safety checks at VCM manufacturers across the country.

This move resulted in tight supplies in the market, particularly for ethylene-based PVC and supported the local market in the past couple of weeks along with strengthening Dalian futures, which were boosted by the temporary trade truce.

Chinese PVC market adds to its capacity in 2018-2020

China is planning to expand its domestic PVC capacity by 4.75 million tons from December 2018 to 2020. These capacities are expected to put China in a net exporter position when they are fully completed.