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Asian PVC players brace for 7th straight monthly hike in Taiwanese major’s delayed Dec offers

by Abdul Hadhi - ahadhi@chemorbis.com
  • 11/11/2020 (09:29)
Asian markets awaiting December PVC offers by a major Taiwanese producer may have to wait a bit more. Players’ expectations, meanwhile, call for a fresh round of hikes amid continuing tightness. If the major increases December offers as expected, this will mark the 7th consecutive month of hikes from them.

“The major producer is waiting for firmer freight rates for December which will not be readily offered in early November and secondly, they will have to assess the impact of the fire at LG Chem’s refinery which may result in a shutdown of their plant for at least two weeks,” a Northeast Asian trader said.

South Korea’s LG Chem had to shut down its naphtha-fed steam cracker in Yeosu after a fire broke out at the plant last week. The shutdown may last for several weeks and possibly affect downstream production units, according to sources.

Vessel availability has also been an issue. Reduced vessel availability and higher freight rates have led some Northeast Asian producers to delay shipments to December, which may perpetuate the issue into next month.

Shipping issues go beyond the PVC market. A Vietnam-based converter explained, “Many shipping companies have one way shipping only as they don’t have any orders for the return journey and this increases the cost of shipping significantly. To make matters worse, the number of ships has also been reduced by more than half.”

India market turns quiet ahead of Diwali

Another factor that may push back the announcement of December offers is the major festival of Diwali in the key market of India.

Diwali falls over the coming weekend but festivities start earlier and stretch into early next week in several states. Business activity traditionally tends to thin during this period.

Similarly in October, the Taiwanese major announced its November offers slightly later due to holidays in China running from October 1-8 which created a business lull with most workers heading to their hometowns.

Another increase expected in December offers

Despite the slightly later expected announcement, the increase in monthly offers is expected to continue for another month as supply remains tight.

The Taiwanese major - which often sets the lead for the market - has been increasing monthly offers from June. For November, the producer raised offers by $100/ton to India and by $90/ton to China.

Supporting the hike was tight supply due to force majeures by Formosa and Westlake on US Gulf material and by Inovyn, Shin Etsu and Kem One on European material. Plant issues in Asia have made the situation worse.

“We expect to see a fresh round of sharp hikes from the major producer for December. Supplies remain tight across the globe, and no relief is likely before January,” a regional trader commented.

Ahead of the December offers, average import PVC prices on ChemOrbis Price Index rose to $1180/ton CIF India over the past week, to $1115/ton CIF Southeast Asia, and to $1117/ton CIF China, all standing at their highest levels in the past nine years.
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