Import PVC uptrend loses momentum in Asia; is the 9-month rally coming to an end?

Import PVC markets in Asia have seen relentless hikes since mid-May, with K67 prices on CIF China and CIF India basis having surged 92% and 116%, respectively, to record highs. The uptrend was particularly fierce during the October-December period since a number of force majeure events in the US and Europe exacerbated the supply tightness across the globe.

The major Taiwanese producer -which often sets the tone for the market in Asia- applied a total increase of $400/ton on its offers to India for four consecutive months starting from October. Not only supply but also surging freight costs played a role in those successive hikes. To China, the total increase for the same period was $320/ton.

Following such notable price hikes, the major producer announced a $30/ton increase to India and China for February. The relatively small February increase was interpreted as a slowdown in the ongoing upward trend.

A few players commented, “Supplies remain tight, and freights are still costly. But overall demand across Asia has waned while China’s local PVC market has been moving lower since last month.”

The major producer’s new PVC K67-68 offers for February stand at $1320/ton CIF India and $1190/ton CFR China, with no volume discount, meanwhile.

Unseasonal rains weigh on India’s demand

The pace of PVC hikes from the major producer to India was already expected to decelerate despite the high-season and shipping issues.

This was because of slower than expected demand in India due to unseasonal rains, cold winter, and farmers’ protests and increasing supply with more US and European producers recently resuming operations after force majeures.

Other NE Asian producers revise PVC offers down to India, China

Two South Korean producers cut their PVC K67 offers to India by $50-$80/ton and to China by $100-110/ton recently, bringing their offers down nearly from last week’s $1500/ton CIF India and $1300-1350/ton CIF China thresholds.

A source from one of the producers opined, “We have revised our PVC offers to China and India down after the major producer’s $30/ton hike for February. This was a move to bring our offer levels closer to the major and also to the prevailing market levels. China’s local PVC market has been on a downtrend since late last year. This factor coupled with a possible arrival of deep-sea US Gulf cargoes to Asia in February may put further downward pressure on PVC prices.”

China’s local PVC market falls on subdued demand

With improved local supply and thin buying sentiment amid lingering year-end lull as well as buyers’ resistance to sky-high market levels, China’s local PVC market has been losing ground for the past five weeks.

Although some pre-Chinese New Year holiday stocking and the partial end of the controls over environmental pollution and electricity use may lead to a pick-up in demand, this is not expected to last long considering the COVID-19 situation coupled with transportation issues.