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Asia’s September PVC outlook takes shape amid dwindling supplies

by Merve Sezgün -
  • 08/08/2019 (04:08)
While players in Asia’s PVC markets have wrapped up their August business with decreases of $30/ton, the September outlook begins to take shape in the midst of tighter supplies, currency devaluations and a few other factors that may play a role in the decision-making process of suppliers.

The dominant factor is supply tightness

PVC supplies have been mostly limited across Asia since early this year owing to a series of planned or unplanned shutdowns while the market has recently become tighter given fewer allocations from South Korean and Japanese producers.

Import PVC prices in India and Southeast Asia tracked a stable to slightly firmer trend this week as a Japanese producer lifted its offers citing low stocks.

“Dwindling supplies have already supported some Asian suppliers in their efforts to reverse the direction of prices. Hence we expect the major Taiwanese producer to pioneer rollovers or slight increases for September,” a regional trader commented.

Formosa plans vinyls maintenance

Taiwan’s Formosa Plastics Group (FPG) is planning to shut its PVC, VCM, and EDC units in Mailiao for maintenance starting on September 10.

The producer’s planned shutdown would add to availability concerns, players noted.

Local markets under pressure from currency depreciations

Most Asian currencies tumbled early this week as the yuan considerably weakened against the US dollar following the re-escalation of trade tensions.

Players in India reported that the depreciation of the rupee exerted upward pressure on the domestic market as competitive local prices boosted demand despite the monsoon tranquility.

“Domestic producers cut their offers at the start of August. However, we believe that prices will soon increase due to the recent depreciation of the rupee as well as low stock levels,” an Indian trader opined.

Spot ethylene at 10-week high

Data from ChemOrbis Price Wizard suggest that the weekly average of spot ethylene prices on CFR China basis has recently hit a 10-week high. The market has been tracking a slightly firmer trend since it recovered from a 10-year low in around early July.

Demand concerns linger

Apart from the bullish factors mentioned above, players pointed out that demand is yet to fully pick up in the market and Asian buyers might be unwilling to accept price hikes of more than $20-30/ton in their September transactions.

The rainy season continues in India and Southeast Asia, limiting trading activities. In China, meanwhile, softer PVC futures coupled with mounting uncertainties over the trade war are keeping buyers in a cautious mood.

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