Chinese ethylene based PVC producer cuts export allocation

A source from a Chinese ethylene based PVC producer reported that they have reduced their export allocation by 30% this month as they prefer to sell more to the domestic market considering that domestic prices are higher than export prices.

The source commented, “PVC prices in China have been declining in line with the approaching Chinese New Year holiday as well as softening futures prices. We think that PVC prices will continue to retreat in January and rebound in February as demand will start to improve after the holiday. We are giving discounts based on the purchasing quantity. This month, our total export allocation is 10,000 tons; 5,000 tons less than our usual allocation as we want to sell more to the domestic market rather than the export market given higher prices in the domestic market. Despite weak demand and lower prices, we are not planning to reduce our operating rate as we are building inventory for the post-holiday period.”

The producer’s current offers for PVC K67 are quoted at $880/ton FOB China basis.
In addition, air pollution in Beijing negatively affects the nearby Tianjin port and transportation as Tianjin port was ordered to be closed for five days last week. This also caused export allocations to reduce on Chinese producers’ side.