Asian PVC prices poised to track Taiwanese major’s Sept offers higher
In line with expectations, the Taiwanese major raised K67-68 offers to $890/ton CIF India and $840/ton CFR China in the latest round. Reflecting market strength, the producer is not giving a volume discount.
With the increase in September, the producer raised offers for four consecutive months from June.
Amid the expectations and ahead of actual offers, a Japanese producer raised its offers to India last week. A source from the producer said, “There has already been buyers’ acceptance of the higher offers, reflecting robust demand and tight Indian supply.”
India, China import prices gain
Import PVC prices in India and China have continued to gain driven by a mix of tight supply and strong demand.
In India, prices have risen to $890/ton from $882/ton on CIF basis so far this week while in China, they have increased to $840/ton from $825/ton on CFR basis - according to the weekly average data from ChemOrbis Price Index.
Import supply has been tightened by turnarounds in Japan and Taiwan.
Taiyo Vinyl is having a three-week maintenance shutdown at its 90,000 tons/year plant at Chiba in Japan over July and August while Formosa Plastics Corp is having a turnaround at its 458,000 tons/year unit at Mailiao in Taiwan.
Meanwhile, the traditionally weak monsoon demand in India stretching from June to September appears to have more offset by the tight supply with most of August business concluded at higher levels.
“Inventory levels are low as arrivals in May and June were only 40,000-50,000 tons per month compared to the usual 150,000-175,000 tons per month. So, there is an acute shortage of PVC in the Indian market,” a domestic trader explained.
Demand has also been healthy in China amid improving sentiment in the runup to the high season for PVC applications in September. The country has also been reporting positive economic data with the government’s stimulus measure to support the economy targeting infrastructure development.
Earlier fears of a continuation of the lack of Taiwanese allocation to China from August amid tension between the two countries have also proved unfounded, with traders reporting no issues with Taiwanese cargoes going to China.
Buyers’ resistance in Southeast Asia
Sentiment, however, has been less robust in Southeast Asia, due to relatively limited demand amid buyers’ growing resistance.
“We just received the offer from Taiwan. It is a huge increase this time and it is beyond our expectation as demand in Vietnam is quite weak,” a local converter said.
Traders lamented that demand was also weak in Thailand along with Vietnam, with both countries experiencing the wet season when there are fewer requirements for PVC pipes. The increasing buyers’ resistance may lead to reduced purchasing, market players added.
Weak demand, however, may be balanced by Indonesian producer Asahimas’ plant returning to near full capacity after technical issues last month. The company’s 250,000 tons/year plant at Cilegon in Indonesia is currently running at 95% but inventory levels are low, according to a company source.
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