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China’s PVC market extends softening into post-holiday period

  • 11/10/2017 (14:49)
Players in China reported that the local and export PVC markets extended their softening trend that was in place ahead of the National Day holiday into the post-holiday period. This was due to retreating PVC futures on the Dalian Commodity Exhange, which posted a total decrease of CNY365/ton ($55/ton) in the two days after the end of the holiday. Weakening demand in the midst of the approaching end of the peak season also contributed to the prevailing weakness of the sentiment.

In the local market, a Shanghai based trader commented, “Apart from the factors including slow demand and softer futures, the fact that PVC prices increased too much previously has also caused the market to lose ground. The ongoing environmental inspections along with the nearing off season are also weighing down on the market.”

A source from an acetylene based PVC producer commented, “Local prices came down by CNY200/ton ($30/ton) this week given lower futures although most producers are trying to deal with high acetylene costs while their inventories are also low. Still, buyers expect PVC prices in China’s local market and across global markets to move lower in the days ahead.”

A source from another acetylene based PVC producer commented, “We think PVC prices will see additional losses next month as construction activities will almost come to a halt in line with the start of the winter season, which will last until the end of the Chinese New Year.”

In the export market, an acetylene based PVC producer reported that their offers for this week fell $160/ton from three weeks ago while another producer’s new acetylene based PVC offers indicate a $110/ton decrease on a monthly basis.

When compared to pre-holiday levels, local prices for ethylene and acetylene based PVC have retreated by around CNY200-300/ton ($30-45/ton) so far this week while export prices for acetylene based PVC are also currently $30/ton lower.

Meanwhile, Asian PVC players are waiting to hear the Taiwanese major’s November pricing, with expectations divided into two. Some players believe that the producer will apply decreases on its new offers to the region as the support from the Chinese market faded and demand from Southeast Asia and India remains slow. “We think the Taiwanese major will wait until the end of the Diwali holiday in India, which will take place in the second half of October, in order to announce November prices. It is quite likely that the new offers will indicate decreases of up to $40/ton from October levels,” a trader opined.

The weakness of Asian ethylene may also exert pressure on the Taiwanese major’s November pricing, they argue. Spot ethylene has been following a softening trend for the past two weeks in the face of increasing supplies amid improved imports from the Middle East along with the end of the maintenance season.

Other players, on the other hand, are pointing to the Taiwanese major’s firm stance during October despite the widespread resistance on the Indian and Southeast Asian buyers’ side. They argue that the major will not prefer to lower its new offers ahead of the nearing peak season in India.
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