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Asian PVC markets take a bullish turn after Taiwanese major’s sharp cuts for Nov

by Shibu Itty Kuttickal -
by Merve Sezgün -
  • 25/10/2023 (11:39)
Asian PVC markets have undergone a notable shift in direction in the latest week, marking a rebound after two consecutive months of price declines. Traders in India noted that the market bottomed out following the major Taiwanese producer’s sharply reduced November offers. On the other hand, demand concerns persist regarding the near term.

ChemOrbis Price Wizard shows Indian import prices fell by about 11% on a weekly-average basis from the third week of September, Chinese import prices by about 12%, and Southeast Asian by about 8% till the third week of October. The Chinese ethylene- and acetylene-based PVC export prices also fell by about 10-11% during the same period.

At the same time, traders have pointed to import offers across Asia and export offers from China rising in the current week. Inside India, a major producer lifted their PVC offers to the domestic market on Monday, following three consecutive price cuts. This happened after the sharp $100/ton cuts by a major Taiwanese producer on its November offers to Asian buyers, which opened up buying opportunities to the markets that have shied away from committing to shipments as prices kept falling.

PVC K67 – India – China – Southeast Asia

Steep Taiwanese cut fuels opposite reaction in India

“It seems now that people have been looking for the right time and the right prices to enter the market. They sense an opportunity now that the monsoon is over. There is speculation that prices may rise in the near term as demand for irrigation pipes for the agricultural sector could increase. There are also whispers of government infrastructure spending rising, especially for unfinished projects, ahead of the Lok Sabha elections likely in March-April,” a Mumbai-based trader said. Lok Sabha is the lower house of the Indian parliament which is expected to usher in a new government by next June.

Another Mumbai-based trader also agreed the Taiwanese price cuts had resulted in “opposite reaction” in the Indian market. “We were thinking that the bearish trend that began in August to continue till at least mid-November as we saw most players sitting tight despite signs that there could be requirements ahead. One reason for this perhaps could have been the ample availability in the Indian markets. But at the same time, we see demand for PVC in India having undergone a structural strengthening over the last few years with the emphasis on irrigation as also capital expenditure growth in other infrastructure projects in the country,” he said. “This means that while there are requirements, Indian buyers may keep waiting for the right time and price for buying,” he added.

Import PVC prices for this week are currently noted in a $750-790/ton range, CIF India, cash, with Chinese origins reported across that range and South Korean offers at $780-790/ton. While buying ideas were heard mostly towards the low end of the range, traders said it could be a matter of a week or two when they expected the high-end to touch the $800/ton mark or above.

Import offers rebound in SE Asia, but caution persists

As for the Southeast Asian markets, a trader in Vietnam said offers from both China and the US have already risen. “After the Taiwanese major sold out shortly after its November pricing notifications, everyone started raising offers. People think the November offers are the bottom and expect December offers to be higher,” he said. But he hastened to add that it would be hard to predict prices ahead as players wait for further clues on the Chinese and Indian demand and supply situation, as well as watch the rapidly evolving geopolitical situation in the Middle East. “We think supplies are still adequate in the region. And, in Vietnam, the PVC prices are lower locally when compared with imports,” he said.

Meanwhile, converters in Vietnam and the rest of the Southeast Asian region are thought to be buying only for immediate requirements and not stocking up. “We’re not sure about the trend next month so we prefer to buy as required for operations, as demand for our end products haven’t yet picked up,” a converter in Vietnam said.

Chinese players: Lesser US availability put a floor under PVC

A source at a producer in northern China said import offers had risen due to less availability of spot shipments. “There are lesser supplies, especially of ex-US Gulf deep-sea shipments although demand has remained flat. So, offers have risen. The steep decline in the Taiwanese offers have resulted in driving suppliers away from offering in the spot market as they consider the current market levels as too low,” he said. “Domestic supplies have shrunk somewhat as a result of some incremental buying. We’ve raised FOB offers as the Indian demand has resurfaced and we’ve managed to conclude some deals at the higher levels to India,” he added.

Cost support is here

At the same time, the increase in energy and feedstock costs have also aided the current turnabout in the market sentiment. While Brent crude oil prices have fallen by about 4% over the last one month, it has risen by about 21% over the past four months. Ethylene prices on a CFR China and CFR Southeast Asia have also risen by 21-23% since mid-June.
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