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Ample supplies, weak demand negate higher costs in Asian PVC import markets

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 27/03/2024 (02:11)
A week into a Taiwanese major’s price hikes for April, the continuing strength in energy and feedstock costs is barely supporting Asian PVC markets pressured by ample supplies and weakening demand. Most players expect the markets to be rangebound in the near term.

ChemOrbis Price Wizard shows import prices into India, Southeast Asia, and China have risen by about 5-7% since the beginning of the year. As of the trading week ending March 22, the midpoint of India’s PVC K67 import prices was assessed at $805/ton CIF, while that for China was at $767/ton CIF and for Southeast Asia $780/ton CIF.

PVC_Asia-prices

But for the current week, early reports from the import hubs indicate PVC prices staying stable, backed by higher costs, although pressured by ample supplies and weak demand. The monthly average of Brent crude futures, as tracked by ChemOrbis Price Wizard, has shown a 10% increase since December. Ethylene import prices have jumped by 16% during the same period on a CFR Southeast Asia basis and by 8% on a CFR China basis.

Indian PVC traders explore other opportunities

“There is a sense in the market that prices are set for a correction downwards despite rallies in the crude oil and ethylene markets, which have meant higher costs for producers,” said a trader based in Mumbai, the financial capital of India.

“Buyers are cautious. Some of us are looking at opportunities in other polymer markets such as LDPE, or ethylene vinyl acetate (EVA), which seems to be gaining some traction in India. Meanwhile, most international PVC sellers are not offering to India as buyers seem disinterested,” he added.

Players in India see market revival only after elections

“We don’t see a great downstream buying interest. There is ample availability as import volumes have kept rising amid suppressed demand. We expect the import demand to remain around the current monthly levels until the Parliament elections are over and a new government is in place,” another Mumbai-based trader said. “We may see the market moving sideways till then,” he added.

The elections to the lower house of the Indian parliament are to be held over several days in April-May, with the results out on June 4. Players expect post-monsoon demand to make its presence felt by mid-July. Meanwhile, operators are looking to try and deplete excess PVC in domestic stockpiles before committing to any further import buying.

Buyers sulk as Taiwanese offers hiked three months in a row

Asian markets received the latest hikes in Asian PVC pricing for April by a major Taiwanese producer with disappointment. In its third consecutive month of hikes, the major notified increases of $10/ton on its April PVC offers to Asian markets, following a $20/ton hike for February and $30/ton for March. The producer’s new PVC K67-68 offers are $10/ton higher from March at $830/ton CIF India, $805/ton CIF China and $760/ton FOB Taiwan, with no volume discounts.

The Taiwanese major’s allocations to India for April are thought to be about 25,000 tons, higher than its March volumes of 20,000-23,000 tons. However, reports indicate not more than 50% of the March volumes were sold out, while the major is still struggling to sell off its allocations for April. “We think the major has included some of its March shipments under the April quota, but it is still facing a problem as buyers are not inclined to commit in the face of ample supplies,” a trader said.

Buying activity has been limited across Asia as a result of a weaker-than-expected recovery in downstream demand, especially in China’s sluggish real estate sector. The weak Chinese demand has meant extra material available for exports. Meanwhile, converters have had comfortable materials on hand, leading to a muted purchase appetite and a wait-and-see approach.

Limited buying in China and Southeast Asia too

In northeastern China, a producer kept its export offers stable for the current week despite the price hike by the Taiwanese major. A source at the producer, who regularly exports to India through traders, agreed “some market participants are disappointed by the Taiwanese major’s April offers as they were expecting a rollover or a slight decrease”.

Local acetylene-based PVC prices had edged lower in the current week, as they tracked falling PVC futures, he said. “Converters are cautious and bearish on their near-term outlook as the construction sector has underperformed and building material demand has been weak for an extended period. There are fewer projects that will lead to rising PVC demand in China,” he added.

The ample Chinese supplies have meant competitive pricing for imports into Southeast Asia too. A converter in Vietnam said, “Demand isn’t very good. Even though we are in the high season for end products currently, the market is not so active. The Chinese are exporting a lot of end products to Vietnam at competitive prices and our customers are ordering less. We believe prices will go down in April by around $20-30/ton, so we’re ordering less this month.”
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