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Has the bear market for Asian PVC almost run its course?

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 23/11/2022 (10:23)
Are Asian PVC markets about to turn around from a seven-month bear run? Regional players believe they could be, pointing to a brisk response from Indian buyers to a major Taiwanese producer’s December offers, but they added lower-priced US offerings could still spoil any bullish party.

PVC import markets in India, China and Southeast Asia have so far lost about half their values prevailing in April, and are currently at nearly two-and-a-half-year lows, according to ChemOrbis Price Index. Indian players said the latest strong buying interest in the Taiwanese major’s prices pointed to a market at the cusp of a rebound.


“Early days yet, but the way buyers are eagerly lining up to buy shows there’s pent-up demand which probably places markets at the bottom now,” an Indian trader said.

Taiwanese major cuts prices for 8th month in a row

The Taiwanese producer on Monday notified cuts of $50-90/ton on its December offers to Asian markets, in the eighth straight month of price reductions. The producer’s PVC K67-68 new offers for December are $90/ton lower than its November offers at $750/ton CIF India and $55/ton lower at $735/ton CIF China, while FOB Taiwan offers are also $50/ton lower at $690/ton. It has also given a volume discount of $10/ton on higher volume purchases.

The Taiwanese major’s prices are considered a benchmark for the Asian markets. Initial December expectations were for larger drops of at least $100/ton, which were trimmed down on a slight improvement in Chinese sentiment after news that China decided to ease its zero-case COVID policy.

Indian buyers take up Taiwanese offers immediately

Information on the major’s allocations to none of the markets was available yet. “We can tell you though that most of our allocations have been snapped up in no time. This points to a healthy appetite for PVC in the Indian market,” said an Indian agent of the Taiwanese producer.

“We’d put the Taiwanese major’s pricing somewhere at the middle of the import prices in India currently as we haven’t seen any US offers this week but that doesn’t mean there are no more offers from the US ahead,” he added.

Traders of US cargoes missing in action in India

In the previous week, offers of US shipments had been noted in the mid-$600s/ton, but the latest week saw few offers of US origins. “Traders having supplies of US origins seem to have been waiting for the Taiwanese major’s pricing. Seeing the good response to the pricing, they may start offering around the benchmark pricing at the low ends but the longer shipment timing for US cargoes could likely mean buyers seeking a discount for those cargoes,” another trader said.

“We may have to wait for a week or two to see which way the market will go from here on,” he added.

Indian prices quoted higher after Taiwanese pricing

Indian import prices are currently assessed as having risen by about $10/ton on both ends of the pricing range at $680-780/ton CIF, cash. In the aftermath of the Taiwanese major’s December offers, a compatriot producer was reported offering to India at slightly higher at $740-750/ton CIF. There were also South Korean offers reported at $670-680/ton CIF India. Some traders were expecting US shipments priced in the low-$700s/ton, but this was in the realm of speculation in the absence of any real offers currently.

Traders also pointed out that there were still buyers waiting for lower prices from the US. “We don’t know what the US pricing is likely to be in the weeks ahead as earlier indications pointed to ample availability with US Gulf producers ahead of the year end.The visibility is not too good in the market currently. We think it’ll take a couple of weeks for the market direction to be clear,” said an Indian trader.

In China, too, players pointed to better demand prevailing after the Taiwanese major announced its latest price cuts for December. “We’ve certainly seen better demand from our export markets after the price cuts were announced,” a Chinese trader said, adding that a better buyer response from India, world’s largest importer of PVC, pointed to a bullish trend ahead.

Southeast Asia sees still lower US offers

But Southeast Asian traders reported still lower offers for US shipments, compared to the previous week. A US shipment was reported to have been offered to Vietnam at $620/ton CIF.

“Demand in the region is still week. The property market is frozen and US shipment prices are still looking down … and could perhaps go even below the current prices. As people expect prices to fall, we don’t want to buy more as selling forward could be too difficult.Market may improve after the Chinese New Year, but recessionary pressures could put a ceiling on the prices,” said a trader in Vietnam.

The sentiment was echoed by an Indonesian trader. “The Taiwanese major’s December offers may have turned the sentiment even more bearish. Meanwhile, local demand has been limited by the falling rupiah against the US dollar, which limits the purchasing power of buyers,” he added.
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