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Asian bearishness forces Taiwanese PVC benchmarks down despite higher costs

by Shibu Itty Kuttickal -
  • 17/04/2024 (09:40)
Taiwanese benchmark prices fell after staying on an uptrend since February despite the persistent strength in freight rates and upstream costs, reflecting the bearishness in Asian PVC markets.

After hikes totaling $60/ton in its offers for February, March, and April, a major Taiwanese producer has reduced prices for May by $30/ton to Asian buyers, very much in line with most expectations from regional players. However, a few sellers have expressed doubts on whether the lower pricing policy can stay in the face of increasing upstream costs.

The ChemOrbis Price Wizard data shows the monthly average of Brent crude prices rising by about 18% since December last year. As for ethylene, import prices to Southeast Asia have surged by about 15%, while that to China have risen by about 7% during the same period.

Taiwanese major struggles to sell India quotas

At the same time, the ample availability in the regional markets has kept buyers waiting for price cuts. “We’re confident of prices falling further as supplies are ample in both China and India. The Taiwanese major also knows this,” said an Indian trader, adding, “The major may not be able sell its full May allotments in the current market despite the price cuts,” he added.

According to the trader, the fact that the Taiwanese major decided to cut prices despite the increase in freight rates pointed to the bearishness in the regional markets. “We think the major has consciously made a decision to absorb the increase in freight costs,” the trader said. According to him, freight rates from Taiwan and China to India have risen by more than 50% in the last one month.

Another trader pointed to the considerable unsold volumes in the Taiwanese major’s allotments in the previous two months to Asian buyers, especially in India, the world’s largest importer of PVC. “We’re not overly worried about availability. For instance, the Taiwanese major doesn’t seem to have managed to sell even half of the allotments in the previous two months to Indian buyers,” he said. The major’s allotments for March and April were more than 20,000 tons each, while information on its May allotments were awaited from market sources. Ample availability from China also kept Indian buyers fishing for still lower prices.

Asian import and export prices fall by 4-5%

Import and export PVC prices in India, Southeast Asia, and China have fallen by around 4-5% since mid-March to reach around three-month lows, as per the latest available ChemOrbis Price Index data. The latest import pricing for ethylene-based PVC shipments were assessed at $750-800/ton CIF India and $720-760/ton CIF Southeast Asia. Chinese import prices of ethylene-based shipments for the current week were noted at $705-775/ton CIF. As for exports from China, prices were noted around $725/ton FOB for ethylene-based shipments, and $710/ton for acetylene-based shipments.

PVC K67 – India – China – Southeast Asia

Chinese producers keep export offers stable

A couple of producers in northeastern China kept their export prices unchanged from their previous levels even after the latest Taiwanese benchmark pricing, attributing the policy to the higher input costs.

“We’re not following the price cut by the Taiwanese major. We’re keeping our export prices stable at $710/ton FOB China,” said a source at one of the producers. A source at the second producer kept his pricing flat at $730/ton FOB China, saying, “We’re maintaining our offers because of higher production costs and anyway, the Taiwanese major’s export pricing at $760/ton FOB China was higher than our offers.”

At the same time, that positive sentiment wasn’t shared further downstream. “Demand in China remains weak, with slowing orders for PVC products and low production levels. Soft products and daily necessities maintain stable production, but incremental demand is limited,” said a Chinese trader.

Sellers open for bidding in Southeast Asia

In Southeast Asia, meanwhile, demand in the downstream markets remained weak.

“Sellers are open for bidding and are offering $30-50/ton discounts. We don’t want to build up stocks and prefer to buy on a need-to basis,” a converter said. At the same time, the ongoing Thai Songkran, and the Vietnamese Hung King festivals in the current week have slowed down market activity.
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