Acetylene based PVC prices see further gains in China

In China, acetylene based PVC prices in the local market have witnessed additional increases so far this week after rebounding from a five month-low over the past week. The firming trend continued although the overall demand remains slow given the ongoing off-season.

Higher prices were mainly attributed to the firm futures market, limited supplies in the midst of the ongoing environmental inspections as well as the government’s decision to re-allow the use of coal for heating purpose.

PVC futures on the Dalian Commodity Exchange witnessed a weekly increase of $21/ton as of December 14. Meanwhile, according to media sources, the use of coal for heating in the northern part of the country is allowed again amidst winter conditions although it was banned as part of the government’s plans to reduce air pollution.

A trader commented, “Prices increased further this week given the firmer futures, limited supplies and tightening coal supplies. We think the government’s decision to reuse coal for heating is unavoidable.”

A source from an acetylene based PVC producer also noted, “The impact of the use of coal for heating depends on the region. Although it is widely effective in Shandong, where coal is widely used, no impacts are felt in Tangshan.”

A compounder also confirmed the recent uptrend but said, “Although local prices are higher with support of firmer futures, we are not planning to make any purchases as demand for our products are still weak. We also don’t think the re-use of coal is strong enough to keep prices firm during December.”

In China, acetylene based PVC prices increased by CN50-200/ton ($8-30/ton) so far this week to CNY6250-6600/ton ($807-853/ton without VAT) on an ex-warehouse China, cash including VAT basis.