Asian PVC players voice January expectations

Following an upturn of more than five months, the sentiment has shifted recently in PVC markets across Asia. This softening trend, which was driven by slowing demand in line with the beginning of low season for PVC applications as well as improving supplies from import markets, coincided with a firming trend in the upstream markets, where ethylene prices were boosted further by the rising energy complex.

In India, following the stiff resistance already seen in India’s PVC market for December hikes from a Taiwanese major, players are now mostly waiting to see rollovers from the producer. A source from a major Indian producer commented, “The Taiwanese producer’s January offers may find acceptance only if they approach the market with rollovers. The market will not digest any hike attempt unless oil prices remain above $55/bbl and PVC futures in China turn up.”

Traders in Pune and Delhi also expect to see rollovers from the Taiwanese major. “There are lots of materials sitting at ports due to the liquidity crunch. Converters are working with very low run rates and therefore, PVC sales are quite slow. However, the Taiwanese producer may still come with a rollover instead of a price cut as they are not under sales pressure while current upstream prices are also supportive,” commented one of them. They also concur about a gradual improvement of demand after January.

A second producer in Taiwan also affirmed the lethargy of demand in India in the midst of the ongoing cash crisis. A company source, however, reminded that Reliance will be undergoing a maintenance shutdown in January, after which the high season should start in the country. “As for China and Southeast Asia, import PVC demand has cooled off considerably as players are sidelined to see the new January price from the Taiwanese major,” he said.

Regarding the pricing strategy of the Taiwanese major, the source thinks that they may come with a rollover and if they do not see satisfactory demand, they may adjust their price down. “Considering that crude and Asian ethylene remains bullish, it will be difficult for them to announce a price cut,” he added.

A trader in Indonesia, meanwhile, expects the Taiwanese major to come with a price decline for January. “Demand is not expected to improve soon in Indonesia considering that infrastructure projects are about to come to an end soon. The producers will have to cut the price,” he thinks.