Bullish PVC sentiment cools off in Asia; import markets look for direction

The longest-ever price rally in Asia’s import PVC markets took a knock from a Taiwanese major’s lower-than-expected February hike last week. Following the $30/ton hike announcement, a number of NE Asian suppliers revised down their prices to move them closer to the major’s new levels at $1190/ton CIF China and $1320/ton CIF India.

The weekly averages of import PVC K67 prices for all origins currently stand at $1385/ton CIF India, $1200/ton CIF China, and at $1245/ton CIF SEA. In the aftermath of last week’s fluctuations, import prices across Asia are largely stable this week.

Most players agreed that bullish sentiment has cooled off but they were also at odds about the near-term outlook amidst several divergent factors that may affect the price trend from this point onwards.

Deep-sea cargoes remain scarce; freights are still high

Deep-sea cargoes, particularly from the US, are not expected to arrive in Asia until around March despite the lifting of all force majeures. Some players are even suggesting that the tightness in US PVC supplies may not ease before the end of the first quarter due to scarcity of containers.

“US producers have been enjoying robust demand and attractive netbacks in Brazil for a while. They are still feeling free from any sales pressure, and the prevailing market levels in China are standing quite below their sell ideas,” a trader commented.

US PVC was offered at $1450/ton CIF China, cash this week while the Taiwanese major’s February level was at $1190/ton with the same terms.

“Tight supply for deep-sea cargoes coupled with still-high freight costs should prop up PVC prices in the near term,” some players commented.

China ramps up exports and offers competitive edge in SEA

China does not seem to have been affected notably by the lack of supplies from its top PVC supplier -the US. On the contrary, Chinese producers have been focusing on export outlets in recent weeks due to weak sentiment at home.

Local PVC prices in China had been on a free fall since early December before the market stabilized early this week. “Sentiment in China has slightly improved but it may not last long as the holiday is just around the corner. In addition, the resurgence of the pandemic and the cold weather in the northern parts of the country are also weighing on the outlook for demand,” noted a seller.

China’s New Year holidays will officially begin on February 11. However, many downstream players are expected to leave their desks earlier this year. In February, Chinese producers may continue to target export markets in the absence of domestic demand.

Meanwhile, competitive Chinese ethylene-based PVC K67 offers have been reported at as low as $1140/ton CIF SEA, cash.

India’s demand improving, but high-end offers see resistance

Indian demand has been partly affected by unseasonal rains and farmers’ protests since early January but it is expected to be temporary as the first quarter is traditionally the busy period for business.

“Currently, only India provides high margins for PVC and hence Japanese and South Korean suppliers are mostly focused on this market,” a source from a Northeast Asian producer explained.

However, particularly after the major Taiwanese producer’s February announcement level at $1320/ton CIF, buyers in India started to show resistance towards the high-end offers. “Limited supplies should prop up PVC prices forming the low ends of the market. However, offers at the high ends might be trimmed down given buyers’ resistance,” a seller noted.