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Chinese availability may sour bullish party for import PVC in Asia

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 28/02/2024 (02:45)
Although higher costs may keep Asian PVC markets supported, there are concerns on the supply side, especially from China, which could work against a continuing uptrend. This has come at a time when Taiwanese major’s price hikes for March have found limited acceptance in India and discounts were achieved in Vietnam.

Market players point to Brent crude futures staying above the $80/bbl mark for more than a month and ethylene prices rising by about 12% in the two months till February to reach a high for about a year as bullish signs on the cost side. However, Chinese markets have been sluggish because of the continuing slump in the country’s property sector, which has resulted in ample export availability in the country.

Taiwanese major hikes prices, others follow suit

Sellers from China raised offers following a Taiwanese major’s $30/ton hikes for March, noted at $820/ton CIF India, $795/ton CIF China and $790/ton CIF SEA, with its export offers at $750/ton FOB Taiwan. A Thai producer also offered higher 5%-duty shipments for March to India at the mid-$800s/ton, which translates to about $810/ton for shipments from elsewhere. Offers from Japan and South Korea were few over the past couple of weeks.

An Indonesian producer hiked its March PVC offers to the Southeast Asian region by $25-30/ton from February, while an agent of a Thai producer also reported that their supplier’s March PVC offers to Malaysia were $20/ton higher than February.

ChemOrbis Price Wizard data shows the import PVC markets in India, China, and Southeast Asia are currently trading at four to six-month highs.

PVC K67 – India – China – Southeast Asia
In India, import prices in the latest week have hovered around the same levels assessed in the previous week at $770-820/ton CIF, with Chinese shipments noted at the low to mid-levels of the range, while the Taiwanese major’s offer was at the high end.

“Major traders, because of their overheads, are currently unable to offer Chinese PVC at anything less than $790/ton CIF India. However, we’ve heard claims of Chinese offers at as low as $770/ton CIF. The major talking point in the Indian market is the availability in China. As the economic doldrums in China continue, especially its property sector issues, we expect demand in China to stay weak, leading to a slackening of supply in the country,” said a major trader in the country.

Chinese sellers point to costs, buyers to oversupply

However, this hasn’t meant any major cuts in prices of Chinese PVC being offered into the Indian markets. “The prices are not being reduced by Chinese players to the Indian market as the sellers believe there’s good cost-side support to PVC prices currently,” the trader added.

Regarding the costs, Brent crude futures have mostly stayed above the $80/bbl mark for most of the month till now. Ethylene prices, meanwhile, have risen by about 12-14% in the first two months of 2024 to $960/ton CFR China and $870/ton CFR Southeast Asia, both near one-year highs.

In China, players don’t expect any production issues as turnarounds are currently minimal. But they see downstream units soon resuming operations after the Spring Festival that could bolster domestic demand. “We expect the Chinese market to see a volatile trend in the near term,” a Chinese trader said.

At the same time, a producer in China said supplies in the domestic market were still long. “Downstream purchases have been minimal and although players have started returning after the holidays, we are receiving relatively fewer purchasing orders,” he added.

SEA buyers resist higher price levels

In Southeast Asia too, players noted support from energy and feedstock prices for the March prices of the Taiwanese major. “But we’re also seeing resistance from buyers,” said an Indonesian compounder.

A converter in the Philippines said demand had ticked up slightly as more buyers returned after the holidays. “Players feel the $30/ton hike was a bit too steep, but they also note the higher energy and feedstock costs. We see prices trading at higher levels for March despite some buying resistance,” he added.

But Southeast Asian players mostly kept to the sidelines as demand remained “so-so”, as a Thai converter put it: “Sellers have indicated prices will rise but prices have been stable so far after the Taiwanese major’s hikes. For now, we prefer to remain in a wait-and-see mode.”

Other players in the region pointed to continuing weak demand for end products making it difficult for traders to accept higher PVC offers.
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