Chinese ethylene-based PVC export offers break below $700 for first time in 20 months

Export PVC prices out of China have followed a downtrend for nine weeks, except for a one-week stability observed in mid-June. The weekly average prices for ethylene-based K67 on an FOB China basis have plunged to a three-month low. Notably, the lower end of the price range has fallen below the $700/ton threshold, last seen in late November 2022.

After a period of absence due to skyrocketing freight rates and a container space squeeze, Chinese PVC sellers have resumed exports, particularly to India, since around a month ago as shipment costs eased. Between mid-April and mid-June, freights had increased significantly, preventing Chinese exports and leading to supply accumulation at home. As freight rates began to lower, Chinese sellers were able to resume exports. Despite the reduced shipping costs, they still had to cut their FOB offers to attract Indian buyers. According to industry sources, shipping costs from China to India are currently around $100-120/ton.

This week, ethylene-based PVC K67-68 prices were assessed $5-15/ton lower from last week at $695-735/ton FOB China, cash. The price range for acetylene-based PVC K67 stood at $690-720/ton with the same terms. Export prices for both grades have largely been on a downward trend since mid-June after hitting around eight-month highs, according to ChemOrbis Price Index data.



Market fundamentals remain bearish

China’s PVC markets are grappling with weak fundamentals, including growing oversupply due to the restart of several plants from maintenance shutdowns, combined with persistently sluggish demand. Additionally, unsupportive real estate and downstream sectors have contributed to the current bearish trend.

Demand from India, China’s largest PVC customer, has also faltered due to the intensified monsoon season. “We have cut our export offers due to poor local and Indian demand,” commented a source from a Chinese producer. Another source noted, “Demand has weakened as it is difficult to export at the moment.”

Meanwhile, August offers from a major Taiwanese producer, who hiked their prices to China and Southeast Asia while cutting offers to India, did not improve sentiment. In India’s import markets, Chinese offers continued to form the low ends, reflecting the sales pressure on sellers.

Dalian PVC futures and crude oil further dampen sentiment

In addition to imbalanced supply-demand dynamics, the drop in crude oil prices and falling PVC futures on the Dalian Commodity Exchange have pressured PVC prices in both China’s domestic and export markets.

September PVC futures on the Dalian Commodity Exchange posted an additional weekly loss of CNY23/ton ($3/ton) as of August 7. Similarly, Brent crude futures decreased by around 3% from the previous week, settling at $76.48/bbl on August 6.

Although crude oil declines have not impacted VCM and ethylene monomers, they have dampened sentiment among downstream players, who prefer to stay sidelined with expectations of further declines in PVC prices.