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Global PVC markets plunge after India extends lockdown

by Merve Sezgün -
  • 16/04/2020 (12:46)
The bearishness in global PVC markets has been reinforced by the news that India, the largest PVC importer worldwide, extended its lockdown until May 3. Import prices in most Asian markets have plunged to the lowest levels in more than a decade while Turkey and Egypt have seen the lowest price levels since 2016. Local PVC prices in Europe, meanwhile, are at around 5-year lows.

According to ChemOrbis Price Index data, the downward trend kicked off in mid-March in China and India, where import K67 prices have lost a total of $215/ton and $245/ton, respectively, since then. In Southeast Asia, prices have been decreasing since late February, with their cumulative loss reaching $235/ton recently.

The weekly average of import K67 prices in Turkey has posted a total loss of $208/ton since the downturn started in H1 March while Egypt’s import market has lost $300/ton since late February.

Asia’s import PVC markets see up to 3-digit losses on week

In China, Southeast Asia and India, import PVC prices witnessed up to three-digit drops this week as the extension of India’s lockdown further dampened the sentiment.

*Right click the image and open in a new tab to view the full-sized snapshot.

While all eyes were locked on a major Taiwanese producer’s May pricing, the announcement was postponed to next week due to the uncertainty in the India market.

Players’ expectations for May called for sharp declines of $100/ton or even more.

Data obtained from ChemOrbis Price Index show that the weekly average of PVC K67 prices on CIF China basis hit the lowest levels since December 2008 following the latest round of price reductions. “The cautious recovery in the local market has failed to prop up import prices in China. Buyers are sidelined in anticipation of seeing further price cuts amid India’s absence,” a trader commented.

In India and Southeast Asia, meanwhile, the weekly averages of import prices posted more than $100/ton declines on the week to hit their lowest levels since March 2009. “Demand is quite weak due to the ongoing coronavirus lockdowns. PVC is not likely to be able to recover so long as India’s lockdown continues,” a Southeast Asian trader opined.

PVC extends losses in Turkey, Egypt

Import PVC K67 prices in Turkey were down for the sixth consecutive week while the market in Egypt extended losses into the eight week. Both markets have plunged to the lowest levels since February 2016, according to the weekly average data from ChemOrbis Price Index.

Players in Turkey and Egypt remarked, “US PVC prices have been under a heavy pressure from the absence of Indian buyers due to a prolonged lockdown in the country. The bearish expectations for new pricing of a Taiwanese major continue to depress the sentiment across the board.” South Korean offers were also aggressive, weighing on Turkey’s PVC market.

April deals concluded with up to €100 drops in Europe

In Northwest Europe and Italy, April PVC deals have been concluded with decreases ranging from €50/ton to €100/ton when compared to March. According to ChemOrbis Price Index data, the weekly averages of local PVC K67 prices on FD NWE/Italy basis hit the lowest levels since Q1 2015.

“A few converters, who are mostly in the areas less affected by the virus, have started to secure fresh cargos, albeit on a need-only basis. Others, however, stay sidelined in anticipation of seeing more competitive offers,” traders noted.

Where will PVC head amid India’s absence?

Players are now speculating about where global PVC producers will divert their exports in the midst of India’s absence.

According to some traders in Asia, regional producers have already started to divert their excess cargos at very competitive prices to China, where manufacturing activities are gradually resuming amid easing of coronavirus lockdown.

“However, end product manufacturers in China are facing reduced orders from the virus-hit export outlets. Hence we are not sure if China’s demand will be able to absorb all excess cargos from global producers. In such a case, overseas suppliers may continue to make short sales in Turkey, Europe and Africa,” a player commented.
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