Asian PVC demand stagnant; recovery hopes shift to end of Q1

The Indian budget has failed to provide a bullish push to Asian import PVC markets, with stability reigning in India and Southeast Asia for the fourth consecutive week and in China for the third week in a row. Despite the conclusion of the Chinese New Year holidays, bullish sentiment remains elusive as buying activity continues to stagnate, while hopes for a demand recovery now shift to late Q1.

In the meantime, market chatter has continued over India’s long-waited anti-dumping duties (ADD), expected since early November, when a government panel notified provisional ADDs on different origins.

Prices on a stable to lower trend since Nov

Import PVC K67 prices in India have started falling since mid-December, and have lost about 6% of their value since then, according to data from ChemOrbis Price Index. As for Southeast Asia, the import market began to fall in mid-November, since when prices have seen a fall of 10%. Similarly in China, prices have declined by almost 8% over the same period.

Traders also pointed to a 5% fall in Brent crude futures over the last one month as a catalyst for the PVC price slide.



Taiwanese major delays March pricing – Which way will they turn?

A major Taiwanese producer, whose monthly price levels serve as benchmarks in Asian markets, has delayed the announcement of its March pricing. While some expect prices to stay unchanged for the next month, most players remain uncertain about the direction the producer may take.

“Some of us expected the Taiwanese major to notify its March pricing today, but the delay might indicate expectations of a positive market development. Could it be related to the much-awaited ADD numbers?” asked a major PVC player in India. Another Indian trader said, “We have heard nothing much from the government in this regard and perhaps people have lost interest. But there’s still a lurking fear that there could be an announcement any time and it may not be wise to commit to shipments now.”

For February, the Taiwanese major’s PVC K67 offers fell by $25/ton from January to $760/ton CIF India. CIF China and FOB Taiwan saw the same reduction of $15/ton at $725/ton and $685/ton, respectively. As for Southeast Asia, the producer’s offer level stood at $750/ton CIF SEA, cash, indicating a monthly decrease of $20/ton.

FOB China prices largely stable post-holiday

Despite persistently ample supplies, Chinese exporters have largely kept their prices stable since returning from the week-long holiday. Current FOB China PVC K67 prices are at their lowest levels since late 2008, according to ChemOrbis Price Index data.

A trader said Chinese suppliers continued offering shipments to India in the low-$700s/ton range, often with payment terms of 20% cash upfront and 80% upon submission of shipping documents. “We believe there are buyers of such offers as low as $710-720/ton CIF India,” he added.

In Southeast Asia, a trader, speaking shortly after the CNY holidays, said Chinese origins continued to dominate the pricing range. “Prices are stable across the region mostly because of the current stability in China,” he said.

At the same time, a Thai converter said, “Prices have stayed stable. It’s the high-demand season in Thailand. But we currently buy on a need-to basis. We don’t think prices will change much in the near term.”

Markets hope for revival by end-Q1

In Asian markets, all eyes are on Indian demand, which has yet to show any signs yet of a revival. In China, operating rates at downstream plants are slowly being ramped up.

“But exports to India continue to be challenged because of the higher ADD proposed on Chinese PVC. We still hope that demand will likely tick up late in the first quarter,” said a source at a major producer in northern China. A source at another Chinese producer also hoped for higher demand from India late in Q1. “Domestic PVC supply in China remains ample, but we find the downstream operation rates are slowly being raised,” he added.

The Indian budget did propose a fillip to infrastructure projects, with the government looking to allocate over INR1.15 trillion ($13.3 billion) for capital expenditure. “This does show a clear and continuing focus on public spending on infrastructure as a means of economic recovery. But we’ll need to see the actual tenders before we see buyers returning and prices rising,” an Indian trader commented.

Overall, while expectations for a demand recovery persist, concrete signs of improvement remain absent, leaving market participants cautious about near-term movements.