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Asian PVC markets hit 3-month high, led by Taiwanese major’s Feb pricing

by Abdul Hadhi - ahadhi@chemorbis.com
by Pınar Polat - ppolat@chemorbis.com
  • 08/01/2020 (04:10)
A major Taiwanese producer’s February prices to Asian PVC markets indicated a new round of increases. This was in line with players’ initial expectations driven by improving demand in India, the ongoing tightness across the region and the recent surge in crude oil futures.

The major producer’s most recent offers for February indicated monthly increases of $20/ton to China and India. For the first pricing of 2020, the major producer had also applied a firmer pricing with a slightly smaller monthly hike of $10/ton from December 2019.

Import PVC markets in India, China at highest in three months

Following the latest February announcement from Taiwan, the weekly averages of import PVC prices on CIF China and CIF India basis have reached their highest levels since early October 2019, according to ChemOrbis Price Index.

Revival in Indian PVC market

Higher February offers are attributed to increasing requirements in the first quarter, which are traditionally robust.

“The Indian market is picking up now, as the high agricultural demand season is approaching,” an Indian agent explained.

Ahead of the higher import offers, a major local producer in India lifted its PVC offers by INR1000/ton ($14/ton) late last week, citing low supply and healthier demand in the country.

Around 70% of Indian demand comes from PVC pipes widely used in underground irrigation and water distribution pipes. The remaining demand comes from the construction sector, where PVC is used to make films, profiles, and insulation applications.

India’s fiscal year-end is at end-March which also tends to boost business activity as firms target to close their books for the year on a firm note.

Demand is expected to remain strong until May, especially in construction, where the monsoon season stretching from June to September hinders construction due to heavy rains.

Limited availability is another factor

Supply factors add another dimension to higher prices.

Trade in deep-sea cargoes from the US and Europe have slowed due to the year-end holiday season leading to limited availability. Meanwhile, February allocation from Taiwanese suppliers are limited due to the Chinese New Year holidays in late January during which time these producers may run plants at reduced rates.

Allocation to India already sold out

A trader in India reported that the major Taiwanese producer sold out its February allocation to the country on the same day of the announcement.

Local China PVC market defies firming in imports

After a nearly three-month of firming, China’s local PVC market faltered over the past week. The market has been on a stable to softer note since then.

This is because the weak stance of demand has overshadowed the impacts of higher energy costs and firmer February prices across import markets.

The overall market activity is expected to slow down soon as players are likely to start to leave their desks by next week for the Chinese New Year holiday in late January.
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