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Asia’s firm PVC sentiment shows signs of faltering amid competitive Chinese offers

by Merve Sezgün -
  • 27/02/2020 (04:24)
PVC prices in most Asian markets increased from December to mid-February on the back of tight supplies and India’s robust seasonal demand. However, in recent days, the firm sentiment has shown signs of faltering. This is because Chinese producers have started to ramp up exports due to virus-hit local demand, and offered PVC at competitive levels particularly to Southeast Asia.

China’s local market hits multi-year lows

According to data from ChemOrbis Price Index, the weekly averages of ethylene-based and acetylene-based PVC K67 prices on ex-warehouse China basis have plunged to their lowest levels since June 2017.

Several PVC producers reported that they have increased export allocations as demand remains minimal inside the country amid the ongoing coronavirus outbreak.

“Local prices continue to decline, dragged down by subdued demand. In the meantime, import PVC prices across Asia have been moving higher, led by a major Taiwanese producer’s March hike. Hence we have shifted our primary focus to export markets,” a source from a domestic producer said.

Offers from China to SEA decline as much as $50

In Southeast Asia, import offers for Chinese PVC K67 have decreased around $40-50/ton from last week. In the ethylene-based PVC market, the low end of the overall price range on CIF SEA basis has been formed by competitive Chinese offers at $860/ton this week.

Outside of China, Southeast Asia has been among the regions significantly affected by COVID-19 with quarantine measures slowing operations and reducing demand. “Thin demand has balanced out relatively tight supply. Many buyers are resisting price hikes for March,” players noted.

India’s import market stabilizes at one-year high

PVC demand has been robust in India for a couple of months now, due to the peak agriculture season and strong construction activity. In addition to this, supplies have been mostly tight across the globe. A combination of these two factors has pushed import prices to India higher since the beginning of the year.

This week, however, data from ChemOrbis Price Index suggested that the weekly average of PVC K67 prices on CIF India basis has largely stabilized at its one year-high.

A source from a local producer commented, “India’s PVC demand remains solid and the market sentiment is still supported by higher price announcements for March. However, the increasing number of competitive offers from China and some other countries may exert pressure on prices.”

In India, Chinese PVC is subject to an anti-dumping duty of at least $61.14/ton, in addition to a customs duty of 10%.

“Even if buyers do not rush to buy Chinese PVC, the existence of these competitive offer levels may strengthen their resistance to further price hikes,” a trader opined.
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