China’s local PVC market supported by firmer futures, tightness
Although the demand side has not fully contributed to this firming period, tight supplies driven by maintenance shutdowns and stronger futures were cited as the main factors that are supporting the markets.
PVC futures up almost 3% on week
Local PVC prices have followed futures higher during the first week of December, pushing sellers to maintain their firm pricing.
January PVC futures on the Dalian Commodity Exchange increased CNY185/ton ($26/ton) or nearly 2.8% on the week as of December 3.
Shutdowns result in tight local supply
Supply levels for both ethylene and acetylene-based PVC in the local market have been reportedly tight given maintenance shutdowns at major plants in the country during last month.
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A Chinese producer lifted its offers for ethylene-based PVC by CNY200/ton ($28/ton) from last week while applying a larger increase of CNY500/ton ($71/ton) for acetylene-based PVC.
A company source opined, “Local PVC prices have jumped this week as inventory levels are low following shutdowns. Meanwhile, we think that the firming trend in the local China PVC market may influence a major Taiwanese producer’s January announcement to Asia.”
Transportation issues add to tightness
Harsh winter conditions have been disrupting transportation in China, according to market players. Apart from the certain impact of shutdowns, this factor has also deepened supply issues across the country.
Demand limited despite the uptrend
Buying interest for PVC applications has remained scant despite an uptrend that has been in place for more than a month. In addition to the winter season that obstructs construction activities, the uncertainty over the trade war with the US and economic concerns over a global-scale have also weighed on demand.
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