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Ample supplies keep a bearish pall on Asian PVC markets

by Shibu Itty Kuttickal -
  • 22/03/2023 (02:04)
Just a week after a major Taiwanese PVC producer cut its April offers to Asian markets, regional players are quoting levels much lower than the major’s prices in latest offers and bids for April shipments. Most players expect the bearishness to continue for the near term.

Markets have come under pressure as the major reduced April prices by $60-70/ton amid ample availabilities. The producer’s PVC K67-68 new offers for April are $70/ton lower than March at $900/ton CIF India, and $60/ton lower at $865/ton CIF China and $820/ton FOB Taiwan. Its March offers were $40/ton higher than February offers across Asia.

Slump gathers momentum in March

Indian markets have tracked a softening trend since the third week of February, with the slump gathering momentum in March, as ample availability and competitive offers pressured prices. As demand from the key Indian market stayed weak, Chinese and Southeast Asian markets have also seen burgeoning availabilities, dampening demand as well as prices.

ChemOrbis Price Index data show that India’s import K67 market falling by slightly more than 4% in March, while China’s and Southeast Asia’s K67 prices posted losses of around 1% and 3%, respectively from February. PVC prices have fallen to their lowest levels so far this year for Indian and Southeast Asian markets, and to the lowest since late-December 2022 for the Chinese market.

Lukewarm response to Taiwanese major’s offers

The Taiwanese majors’ offers have been met with a lukewarm response from buyers. There is market talk that the major’s agents are declining part of the allocations as they find it hard to sell them.

“No one can quarrel with the agents. It’s just not possible to sell at this price, at least in India,” said an Indian trader. “And it may just not be advisable to hold shipments ahead of the monsoon, starting in June,” he added.

A local agent of the Taiwanese major agreed on a “a distinct possibility” of returning part of the allocations, as they cannot be sold at the offered levels. “The pricing doesn’t work in the Indian market currently. Most bids are in the low-to-mid $800s/ton CIF India. Availability is plenty and this is keeping buyers at the low levels,” he added.

Where are the buyers?

Although Chinese and South Korean sellers have mostly sat tight following the Taiwanese major’s offers, most players expect them to bring down offers to India to the low-to-mid-$800s/ton. “We don’t see buyers currently even at prices around $850/ton CIF,” a Mumbai-based trader said.

Chinese offers were heard in the previous week at $870/ton CIF, while South Korean origins were priced at around $920/ton CIF. Both offers did not find any takers.

Indian domestic prices also tank

The Taiwanese major’s price cuts have apparently led to a major Indian producer also to reduce local prices by INR3000/ton ($36/ton), after keeping them stable for eight weeks in a row.

Local prices of PVC K67 imported into India were also heard lower than the previous week. The Indian domestic prices were assessed INR1000-3000/ton ($12-36/ton) lower at INR81,500-88,500/ton ($1000-1110/ton), on an ex-warehouse, cash basis.

Long-term bearishness in the offing?

"The April price cuts from Taiwan have come at the top end of expectations at $50-70/ton, as demand stays bearish amid a sea of competitive offers, including deep-sea ex-US Gulf arrivals expected in India heading into the monsoon season,” said a major trader based in Singapore. “We see the downtrend continuing, as the Indian market needs time to consume the current supplies.”

The monsoon in India typically begins in the first week of June and continue till around mid-September and the post-monsoon season demand is typically felt in August.

As for China, supply pressure has undermined PVC prices in March. “There are fewer plants undergoing turnarounds, and there are new start-ups exerting pressure. Supplies may slide in April because of more scheduled shutdown but orders from end-users haven’t shown any significant improvement,” a trader commented.

Market players expect China PVC markets to stay weak over the near term in line with limited demand and high availability at home, along with a spillover impact from Asian bearishness. It remains to be seen whether expectations of lower supplies in April can support the market.

Along with adequate supplies, weak demand has also kept the Southeast Asian markets dampened. A converter based in Ho Chi Minh City expected prices to keep dropping. “At this rate, we worry prices will drop below $800/ton CIF Vietnam. Demand stays weak and we prefer to buy locally, as we don’t want to keep high inventory now,” he said early this week.
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