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Bottom talks start in India’s PVC market after 3-digit drops for July

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 23/06/2021 (03:12)
With import PVC prices in India having lost more than 16% of value over the past nine weeks, players’ discussions have moved to whether a price floor might be nearing. A major Taiwanese producer -which often sets the tone of the market- approached India with a $130/ton decrease for July earlier this week while other regional producers followed suit.

If the considerable interest to buy PVC for July delivery soon after reduced prices were announced by Northeast Asian producers is any indication, the bearish phase has run its course, market players said. Prices have now slid below the $1400/ton CIF threshold for the first time since early February.

According to data from ChemOrbis Price Index, the weekly average of PVC K67 prices on CIF India basis has witnessed a total decrease of $280/ton since the downtrend kicked off in late April. However, average prices are still standing $780/ton above the levels seen in May 2020, right before the longest-ever price rally began.

Import PVC K67 Prices - CIF India

Sellers report robust demand towards new July offers

“Robust buying was seen on 21st June, when a major Taiwanese producer announced a $130/ton price decrease from the previous month for its July-delivery cargoes. PVC traders, converters, and compounders were hoping that such a move would present an opportunity to replenish stocks. That pent-up demand is making its presence felt,” said a Mumbai-based trader.

Following the Taiwanese major’s decision, other regional suppliers have also applied a similar pricing policy due to the COVID-hit demand. A South Korean producer’s July offers to India were down by $120/ton when compared to June at $1390/ton CIF, cash basis.

Import PVC prices are currently being assessed by ChemOrbis at $1390-1450/ton CIF India, with the low-end reflecting material from Taiwan, China, and Southeast Asia.

“We think the rush to buy shortly after the Taiwanese price revision is an indication that buyers expect prices to rebound soon,” said a trader in eastern India. “We just ignored offers coming our way for more than two months as we knew the bearish phase had still some way to go. Inventory levels, however, kept dropping. At some point, we needed to replenish stocks,” he said.

The declining trend in the second wave of COVID-19 virus infections is thought to have a positive impact on the market. “We are hoping for higher offtakes of our PVC products from September onwards now that we may be able to start operating normally so we expect to start buying in August,” a compounder in Southern India said.

The pandemic has meant lower demand for plastic products at end-user markets. Further, it has forced PVC converters and compounders to reduce casual worker numbers over the past several months because of the pandemic. Apart from the lower production of end-products, this also meant lower requirements of PVC.

Another reason for the expected rebound in PVC prices is the likely post-monsoon demand. The monsoon rainy months of June to September are typically a low-demand season for the PVC end-user market in India. Buyers tend to start stocking up for the post-monsoon season in August, when demand starts picking up. “Buying for the post-monsoon season starts in August and that’s another reason why prices should rise,” said the Mumbai-based trader.
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