Asian PVC players expect September price cuts from a Taiwanese major

PVC prices in Asia are expected to continue their downtrend in the coming weeks, with most players predicting that a major Taiwanese producer will reduce prices for its September import allocations to regional markets.

In the latest week, import prices have seen further decreases across Asian markets, with low-end prices dropping below the $800/ton CIF India mark for the first time since mid-May, according to ChemOrbis price index data.

Current price levels for ethylene-based PVC K67-68 are reported at $770-850/ton CIF India, $720-800/ton CIF Southeast Asia, and $750-820/ton CIF China. The midpoint of Indian import assessments has fallen by a significant 15% over the last six weeks, while those of China have declined by about 7% and Southeast Asia by about 4%. Import prices in India and Southeast Asia are at nearly three-month lows, while prices in China are at a 10-week low.

Ample Chinese availability, lower freights, and monsoon weigh on outlook

Traders indicated that prices have been trending downward as demand remains weak amid perceptions of ample availability in the Chinese markets.

“Prices may continue to fall, especially with the strong monsoon in India. It’s the off-season across Asia, with torrential rains also reported in China and Southeast Asia. Consequently, buying activity has been low, and market participants are likely to wait for the major Taiwanese producer to reveal its September prices,” said a major PVC trader based in India.

Falling freight rates have also contributed to the recent downtrend. Freight rates from China to India are currently around $80/ton, down from a peak of $180-190/ton in June.

Taiwanese major delays Sept announcement

The major Taiwanese producer has delayed its September price announcement, while most market players expect a price reduction across Asian markets. For August shipments, the producer set prices at $910/ton CIF India, down from $980/ton for July. According to some traders, the producer may have sold at prices as low as $860/ton CIF India. The producer’s China import prices were up $10/ton at $830/ton CIF for August, while FOB Taiwan offers were rolled over at $775/ton.

Meanwhile, there are enough indications available of prices continuing to fall. According to a PVC pipe manufacturer in southern India, a Japanese producer’s PVC K67 was being offered at a duty-free price of $910-920/ton CIF India, equivalent to about $840-850/ton CIF India for dutiable shipments from elsewhere. “PVC prices are certainly on their way down. Demand has still not started to make its presence felt although some downstream buyers may start buying shortly for their post-monsoon requirements,” a source at the plant said.

A Mumbai-based trader mentioned that buyers are likely expecting further price drops. “We believe there is nothing currently in the market to support a rise in PVC values. We have an offer for a US shipment to UAE’s Jebel Ali terminal at $780/ton CIF, but we’re uncertain if we can achieve that price. We’re waiting for the latest shipping rates and may offer at $760-770/ton CIF west coast India, depending on freight costs,” he said, adding that players were anticipating prices in the low-$700s/ton CIF India.

Japanese sellers aggressive in SE Asia

Import prices in Southeast Asia are also lower this week. “Prices have dropped further, with Japanese sellers being quite aggressive. However, they are still struggling to sell out their allotments,” said a trader in Vietnam.

The trader added that a Thai and an Indonesian producer are expected to be certified by the Bureau of Indian Standards next month, which could lead to a sizable volume being exported to India from next month. This may offer some support to Southeast Asian prices. Traders in Southeast Asia suggested that with the BIS policy expected soon, producers might delay exporting to India, leading to short-term inventory pressure in the region.

Real-estate slump keeps China demand weak

In China, there is a growing oversupply of both finished goods and PVC raw materials due to weak demand throughout the supply chain. “Demand has remained sluggish within China due to an unsupportive real estate sector and weak downstream markets. In India, demand has also been faltering due to the monsoon and import policy changes. Market participants are awaiting the Taiwanese major’s September offers, with most expecting a price decrease,” said a source at a Chinese producer.