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Asian PVC back to pre-pandemic price league; players question the bottom

by Pınar Polat - ppolat@chemorbis.com
  • 04/08/2022 (09:48)
PVC prices in China, India, and Southeast Asia were on a steady downtrend from the second half of April to late July, and spot import prices fell to their lowest levels in around two years, based on ChemOrbis data. Regional PVC markets are now back to their pre-pandemic price league with three-digits.

Back in 2020, when the markets were first rattled by the pandemic, PVC prices saw their lowest in May, and this was followed by a relentless uptrend until April 2021, the first all-time high, according to ChemOrbis data. Having seen some correction in the following months, PVC prices saw the rally roar back to hit new record-highs in October 2021.

Disregarding the upturn in the first quarter of 2022, PVC prices have been retreating since then with a cumulative drop of 50-55% from the all-time high.

PVC – Asia

After such a long bearish run, some players have started to question whether the markets are finding the bottom nowadays, with a green light from the cautious recovery in China’s local and export PVC markets.

China’s local, export prices extend gains into 2nd week

China’s local and export PVC markets reversed course over the past week and followed a stable to slightly firmer trend despite weak demand conditions at home. The rise in Dalian futures prices mainly propelled the firming, and accordingly, players were at odds about the sustainability of this recovery.

Still, initial reports have shown that the cautious firming in China’s local PVC markets has continued this week as supplies have also tightened. “We think PVC prices may bottom out soon as Chinese suppliers have cut operating rates by 20-30%. We have hiked our export offers by $10-20/ton from last week,” said a source from a Chinese producer.

Export prices out of the country for ethylene-based PVC were assessed stable to $10/ton higher from last week at $910-920/ton while acetylene-based PVC prices were assessed stable to $20/ton higher at $880-890/ton, all on FOB China, cash basis.

Meanwhile, the support from the Dalian futures prices has continued albeit partially. September PVC futures on the Dalian Commodity Exchange edged lower since the beginning of the week, but they were still indicating a weekly gain of CNY300/ton ($44/ton) as of August 3.

Local prices for ethylene-based PVC prices were CNY200/ton ($30/ton) higher from last week to stand at CNY7,000-7,150/ton ex-warehouse China, cash including VAT ($1038-1060/ton without VAT) while acetylene-based PVC prices increased by CNY300-350/ton ($44-52/ton) within the same period to stand at CNY6,800-6,950/ton ex-warehouse China, cash including VAT ($1008-1030/ton without VAT), respectively.

India markets set for seasonality

Adding to the glimmer of hope from China markets is the expected post-monsoon demand in India, which should set in shortly. Some Indian buyers have already started buying from previously lower levels, meanwhile.

An Indian trader said, “We think that the Indian PVC market has hit the bottom and prices will start to rise from now on.”

Meanwhile, some players have maintained their cautious stance by citing the comfortable availability of supply in the country.

Another regional trader commented, “PVC offers have appeared to be bottoming out considering China’s extended rebound. However, the Indian market is still facing downward pressure from US-origin offers at very competitive prices. We think that a major Taiwanese producer’s September announcement to Asia will be vital. Should September contracts be cut further, by $100/ton at least, this may also introduce a new price bottom for PVC.”

On a side note, the major producer’s August offers were deemed too high to see acceptance although there were monthly price reductions of $190-230/ton. The major producer did not step back from their August offers despite the market perception, which was also speculated as a signal of a potential rebound.

In India, import PVC K67 prices of overall origins were assessed stable from last week at $950-1020/ton CIF, cash basis.

Purchases made at competitive levels in SE Asia, bottom mooted

Similar to India, there has been some buying activity in the past couple of weeks in the Southeast Asia market, where spot prices fell below the$900/ton mark by the second half of July.

A Vietnamese trader reported concluding deals for Japanese cargoes at $850/ton CIF over the past week and said, “We have sold out PVC Japanese cargoes last week. Many buyers have replenished recently as they think prices have either reached the bottom or neared the bottom.”

In Southeast Asia, import prices for all origins were assessed stable to $10/ton higher from last week at $850-900/ton CIF, cash.
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