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Faltering demand weighs on Asian PVC markets, sentiment turns bearish

by Shibu Itty Kuttickal -
  • 29/08/2023 (09:06)
Asian PVC markets plateaued in the last couple of weeks after rallying for about one month, but the latest week has seen prices sliding at the low end as expectations turned south, especially in India, the largest buyer in the world.

Depressed demand across the Asian markets is seen as the main reason for the latest bearish expectations with most players pointing to ample availabilities in both the Chinese and Indian markets encouraging buyers to wait for prices to fall ahead. Asian ethylene prices have risen by 10-11% in the last seven weeks, providing a reason for sellers to raise prices or keep them at elevated levels, but resistance from buyers to the high prices has emerged in the last couple of weeks, and outweighed the cost-pressure.

Pressure on the low end in India

Market players said the current offers to India are mostly from traders having some excess Chinese shipments trying to somehow sell off at whatever prices they can manage. Traders have noted offers from Chinese players to the Indian market at levels of around $850/ton for ethylene-based and $830/ton for acetylene-based offers CIF in the current week. They stand at least $20-30/ton below the low end of last week. There were offers as high as $900/ton CIF last week.

“We believe there are sellers in the local markets laden with Chinese shipments and they may want to sell off as much as they can at whatever prices they can get so they don’t get caught with stocks that they can’t sell,” said a trader based in Mumbai.

PVC – China – Import – Export – CIF – India – SEA

Before this week kicked off, ChemOrbis Price Index data showed that the weekly average of import prices to India, China and Southeast Asia have risen by about 16% since the week beginning July 10. Chinese export prices of both acetylene- and ethylene-based PVC K67 prices have risen by about 14-15% during the same period.

Traders wait for infrastructure tenders in India

“Demand for import shipments is mostly not too good, with strong resistance to offers at the high ends,” said another trader, also based in Mumbai. Earlier, market participants were expecting tenders emerging by mid-August for government project-related requirements in India, but the expectations were belied.

Traders still expect the tenders to be announced ahead of the country’s parliamentary elections in March-April next year but were unable to say when exactly this would start having an impact on the market.

Ample availabilities with traders in India may result in the appetite for imports decreasing. Demand rose slightly last month on expectations of more requirements to surface in the months ahead, especially after the monsoon season is over. But import volumes to India have increased by nearly 40% on an annualized basis. This could mean more local sources for Indian buyers to look up to for their regular requirements and place a lid on any runaway price rise for imports, traders said.

China’s export PVC offers to Middle East erode too

The lack of buying interest seen generally in Asia lately has certainly pressured sellers in China to offer at lower levels to buyers in the UAE. “We have offered a shipment from a producer in China to Jebel Ali buyers late last week at $840-850/ton but has still not elicited a positive response. We hope to see lower priced offers shortly into India too, as import parities of local prices have already fallen below the mid-$800s/ton on a CIF basis,” another trader said. He added that carbide-based offers at even lower prices may put further pressure on ethylene-based cargoes too.

Chinese demand recovery loses momentum

Inside China, market participants have generally detected a loss of momentum in demand recovery, too, as adequate supplies are coming to light. “The market has enough supplies for the near term,” a local trader said. “And we see demand under pressure locally as well as in our export markets as requirements have remained low,” he added.

Although the upcoming peak season in September-October may bring back some buyers, players don’t expect this to propel prices any higher. In fact, the slower demand recovery in India, as well as the relentless fears about slower economies in other developed countries, may keep global demand suppressed, they added.
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