Chinese PVC sellers’ aggressive stance allows no respite from decreases in Asia

In Asia, PVC prices have been on a relentless downtrend since the second half of April. This is mainly due to the Chinese sellers’ aggressive offers in the regional markets, particularly India considering weak demand and oversupply at home.

While the monsoon season in India and renewed Covid-19 fears in China have continued to cripple regional demand, inflationary pressures and the fall in crude oil prices have added to the lingering bearishness.

FOB China offers test new lows

To maintain their competitiveness in the key India market, Chinese sellers have applied additional decreases on their export offers this week. “There are many competitive offers in the Indian market and buyers have been holding out for even lower offers,” said a seller.

Spot prices for ethylene-based PVC were assessed $120-140/ton lower from last week at $960-990/ton while acetylene-based PVC prices were assessed $60-80/ton lower at $930-960/ton, all on FOB China, cash basis.

Several Indian players highlighted that FOB China offers will retreat further in the upcoming days, considering the recent levels of PVC futures prices in China.

Dalian losses weigh on China’s local PVC markets

Inside China, ethylene-based K67 prices slumped by CNY400-450/ton ($60-67/ton) from last week to be assessed at CNY7400-7650/ton ($978-1010/ton without VAT) on ex-warehouse China, cash including VAT basis. As for acetylene-based PVC, spot prices plunged by CNY500/ton ($75/ton) to CNY7000-7300/ton ($925-964/ton without VAT) on similar terms.

September PVC futures on the Dalian Commodity Exchange retreated by CNY607/ton ($90/ton) on the week as of July 6 to settle at CNY6692/ton ($883/ton without VAT).

A seller noted, “China’s local PVC prices have fallen further this week, dragged down by weaker PVC futures prices. Producers have continued to hold high inventories while demand has remained persistently bearish. The resurgence of Covid-19 infections has led to a loss of confidence in China’s demand recovery.”

Low end of CIF India offers near $1100 mark

Having remained under the pressure from Chinese oversupply, the Indian PVC markets have extended their losses into July. The overall ranges for import PVC offers are assessed $60/ton lower on the week at $1110-1200/ton CIF.

The weakness of the rupee against the USD has also made import purchases harder, keeping buyers on the sidelines. The rupee fell to another historical low on Tuesday of slightly below INR79.40 against the dollar. Experts are holding out for the rupee to fall below the INR80/USD mark shortly.

A bottoming-out is out of sight

Indian players already think that a bottoming-out was not in sight for now. “In fact, players think prices could keep on falling. Some traders are expecting prices to fall to as low as $1000/ton by September,” said a trader.

Market trend in SE Asia is no different

In Southeast Asia, import prices for all origins were also assessed $60-70/ton lower from last week at $1050-1110/ton CIF, cash.

“Prices continue to drop as demand for end-products is very weak. We don’t dare to buy more material and would prefer to stay in a wait-and-see mode for now,” said a Thai converter.

Early expectations for Aug pricing hint at a new round of price cut

Some regional players have started to voice their expectations regarding a major Taiwanese producer’s August pricing, which mostly hints at a new round of price cuts. This also reinforces the current bearishness.

On a side note, July was the third price reduction in a row from the major producer, indicating a monthly loss of $90/ton to all markets. The producer had reduced prices by $130-150/ton for June, a month after it cut prices by $50-80/ton for May.