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Asian PVC prices cautiously rebound from more than 2-year lows

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 30/11/2022 (05:40)
Prices in Asian markets have seen rebounds after a seven-month bear run, but worries about the global economy, especially over protests in several Chinese cities against Beijing’s strict zero-COVID policies, could still keep any price rise in check.

ChemOrbis Price Wizard shows PVC K67 prices rising in the week ended November 26. US cargoes offered on low-ends disappeared from the market and a Taiwanese major’s December allotments to Asian markets , priced $50-90/ton lower from its Nov offers, were swiftly taken up by buyers in India. This marked the end of a downtrend in the Asian PVC markets that began in early April. The price increases sparked discussions among some market players of a possible bull run ahead in the market, although others were sceptical about the sustainability of this uprise.
PVC – Import – China - India

India sees brisk Taiwanese sales, drying up of US origins

In India, the overall range for import PVC K67 prices for the week ended November 26 was assessed $10/ton higher from the previous week at $680-780/ton CIF.

Indian players pointed to two developments. “A major indication of a change in market dynamics was the surprisingly positive response to the Taiwanese major’s December price notifications. Most of the major Taiwanese producer’s December allocations were taken up soon after the offers were made,” an agent of the producer said. “A second sign was the disappearance of low-priced US origins from the market shortly after the Taiwanese major’s offers,” he added.

“It may not be that there is a dearth of US origins. But there is certainly a change in the stance of traders offering US shipments. A number of US shipments were priced in the mid-to-high-$600s/ton CIF India before the Taiwanese major’s notifications. But sellers are currently talking prices starting in the mid-$700s/ton,” said a source in Mumbai at a US-based trading house.

Earlier this week, an Indian trader offered K67 shipments for December from a Chinese producer at $820/ton CIF India. “The negotiations were wrapped up without much of a fuss, with a buyer agreeing to a price of $810/ton for 1000 tons,” the trader said. “Buyers had kept away from the market for a prolonged period, hoping for prices to keep falling. But the latest pricing trends point to pent-up demand in India making its presence felt in the market,” he added.

China origins back in the Indian market

Chinese players have stayed away from the market for more than two months pending the conclusion of an Indian government investigation on the possibility of imposing a safeguard duty on Chinese PVC shipments with a residual VCM content of more than 2ppm. “The latest trend shows Chinese sellers can trade with Indian buyers if the price is right, duty or no duty,” the trader said.

In the previous week, another Taiwanese player had offered to the Indian market K67 shipments in a $810-820/ton range.

Exports from China see a two-week rising trend

For the week ended November 26, export prices out of China for ethylene-based PVC were assessed $20-30/ton higher from the previous week at $740-780/ton FOB China, cash basis while acetylene-based PVC prices were $20/ton higher at $730-770/ton on similar terms.

Chinese players have started deliberating on the likelihood of prices snapping the seven-month downtrend. The extended rise in FOB China offers contributed to these expectations. Yet, players were also still cautious when it comes to lower-priced US offerings and China’s adherence to zero-Covid policy, which may limit the impact of any bullish factor.

A Chinese trader said earlier in the week that spot offers have stayed stable to slightly higher during the week especially after China’s central bank agreed to lend more money to property developers. “We have seen converters starting to replenish stocks. But orders haven’t started surging as yet,” he said. “The world economy is still slowing, and China is affected by increasing numbers of COVID cases,” he added.

Firming trend for Southeast Asian import prices too

In Southeast Asia, the overall range for import PVC K67 prices in the week ended November 26 was assessed stable to $20/ton higher at $650-780/ton CIF, cash.
As prices in India, the biggest importer of PVC in the world, have looked up, Southeast Asian players expect other Asian regions also to follow suit probably with a time lag.

“We’ve sold out our December shipments already,” said a producer in Southeast Asia.

PVC demand is looking up as buyers have started to replenish stocks, worrying that prices could continue to rise. We think prices will continue rising in the month ahead but it’s anybody’s guess whether the uptrend can be extended for a longer period,” he added.
A Vietnamese converter said local supplies have tightened. “There’s lesser material being offered currently as a producer is operating at low rates. We feel prices may have reached the bottom,” he added.

But economic worries may keep the bulls away

Despite the upbeat sentiment currently, there is also underlying worries that the current global economic weakness could spoil expectations of a sustained uptrend ahead. Risks to the world economy have remained, as being reminded by the resurgence in Chinese COVID cases. Recent protests in several Chinese cities against the Beijing government’s strict zero-Covid policies have reignited concerns in financial markets over the economic costs of the pandemic. Global oil prices have fallen back, while the Chinese yuan and stock markets across Asia have taken a hammering.

All these are worries for the Asian PVC markets too, with any supply overhang resulting from suppressed demand in China being directed likely to regional destinations. After a hiatus, Indian buyers have started receiving offers of the Chinese origin, but prices have been at the high-end of the import range to India.
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