Asia's import PVC rally falters amid softer low-end offers, but hurricane impact looms

PVC import prices in Asia are currently experiencing downward pressure at the low ends, primarily due to falling freight rates from China. However, traders expect a Taiwanese major to roll over its prices for August.

However, the impact of Hurricane Beryl, which has led to refinery and PVC plant shutdowns in the US, could squeeze availability to Asia that could be net bullish for the market. Meanwhile, Brent crude futures have hovered around the mid-$80s/bbl in the last couple of weeks, keeping up the cost pressure on PVC, although feedstock ethylene has mostly been rangebound. “Most market participants expect the benchmark prices from the Taiwanese major to be rolled over for August,” a trader based in Mumbai said.

China freight rate slide pressures low-end prices

Freight rates from China have slid by more than 10% over the last couple of weeks, although they remain more than twice as high as in April. Traders, however, do not expect a significant decline in container shipping rates. This is because Chinese exports are expected to continue rising ahead of potential higher trade tariffs in the US, particularly on electric vehicles, which may still curb container space.

“Prices of Chinese imports of PVC K67 grade are currently around $900/ton CIF India, with recent drops in freight rates from China by about $20/ton to approximately $130/ton for shipments to India. However, there’s still a lack of clarity on this, as we’re seeing freight rates all over the place. There’s no unanimity on that question among shipping brokers,” the trader added.



PVC K67 import prices are currently assessed stable to $20/ton lower from the previous week at $900-980/ton CIF India, stable to $10/ton lower at $780-850/ton CIF Southeast Asia and stable at $790-845/ton CIF China. ChemOrbis Price Wizard shows the midpoints of the import price ranges are currently at a one-and-a-half year high for India, and near 10-month highs for China and Southeast Asia.

The surge in the freight rates has obviously impacted not just import prices in India but, to a lesser extent, also those in China and Southeast Asia despite demand staying sluggish across Asia and availabilities considered to be ample. It also reflects the fact that the scarcely available container space was going at a hefty premium across the regions.

The rainy season impact

At the same time, the markets are in the middle of an ongoing rainy season, which typically sees sluggish demand. “This year, however, we’ve seen people buying PVC despite heavy rains forecast during the June-September monsoon season, as traders were expecting the freight rally could be for the long haul,” a trader said.

“Yes, Chinese prices have slid over the last couple of weeks but we’re still not sure whether we’ve seen an end to the strengthening of the freight markets,” he added.

Hurricane Beryl shuts US plants

Meanwhile, bolstering the bulls in the market is the beginning of the US hurricane season, which is expected to shut PVC plants across the US Gulf in the next few weeks. Hurricane Beryl made landfall in Texas early Monday morning. Although it is expected to weaken ahead, Formosa shut PVC operations at its Point Comfort, Texas site on July 8 as a precaution. The site houses more than 700,000 tons/year of S-PVC and 90,000 tons/year of E-PVC capacity, as well as VCM and EDC units. Formosa also shut its cracker at the same site in July after a malfunction with a gas compressor system during the shutdown for the storm.

BASF Total Petrochemical’s Port Arthur, Texas cracker was shut due to a lightning strike from early storms triggered by Hurricane Beryl. The cracker houses 1 million tons/year of ethylene capacity and more than 800,000 tons/year of total propylene capacity. CITGO Refining and Chemical’s Corpus Christi refinery was operating at reduced rates following the storm.

A trader in India with close ties to US producers said, “We expect FAS Houston prices of PVC K67 to be revised above the current mid-$850/ton mark shortly, which could possibly mean prices above the $970/ton CIF India mark shortly. But it is a difficult sell in India for sure.”