Asian PVC players are divided over firmer August pricing
Firmer pricing was mainly attributed to the major producer’s limited quota for the month at around 30,000-40,000 tons, which is less than half of their usual allocation. High spot ethylene prices in Asia as well as the recent recovery in China’s local PVC market were other supportive factors despite weak demand from India and Southeast Asia amid the ongoing monsoon season.
Following the announcement, Asian players shared their opinions in the heat of the moment. Some of them evaluated the major’s increase decision as a reasonable move given availability issues while others argued that the new offer levels are way too high considering mediocre demand.
An Indian trader reported that the major producer sold out its allocation to the country within only a few hours. “As the major’s allocation to India is quite limited at around 10,000 tons, it did not take a long time to sell out,” he noted.
Another Indian trader opined, “We think that increases in August prices are justifiable due to the major producer’s limited allocation. Plus, local producers in India are also holding low inventories now.”
A source from a Chinese producer commented, “Although demand is unpromising, we think that PVC prices inside China will not move back down as supplies are not high. Plus, the major PVC producer’s firmer August prices will also support the sentiment.”
On the other hand, a local producer in India commented, “Demand is slow given the monsoon season while the transportation strike will start as of July 20, which will definitely have an impact on the market. Therefore, we believe that the major Taiwanese producer’s new hike may not reflect onto local prices.”
In Indonesia, a PVC compounder noted, “We are surprised by the major’s August announcement as demand remains slow. Plus, we think that supply concerns will ease in line with the plant restarts across Asian markets.”
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