India PVC market looks to hikes in Feb offers

With the announcement of February monthly PVC offers to Asia by a major Taiwanese producer imminent, industry players are bracing for another hike in India even as the outlook for other regional markets looks less certain.

The Taiwanese major has hiked monthly offers to Asia consecutively from June when countries emerged from lockdowns to start economic recovery from the pandemic.

Saying that the market expects the February price announcement to reflect a further increase, a domestic producer added, “Pricing relief will only occur when deep-sea US Gulf cargoes arrive in Asia which is now likely to in February. Global PVC prices have remained at historically high levels due to the dearth of supply which has prompted some Indian converters to substitute PVC with HDPE and PET where possible.”

US Gulf cargoes were curtailed for much of the second half of last year as a severe hurricane season led to several plants issuing force majeures. The situation was worsened by a number of plants in Europe issuing force majeures as well. These plants have only recently started to resume operations.

High freight adds to costs

The tight supply situation has been worsened by costly freight amid a shortage of vessels and containers, a source at a South Korean producer explained.

Another potential factor that may increase the cost of imported material is the safeguard investigation on PVC from Japan initiated in September last year.

A local trader said, “Japanese shipments are going through a rough period due to transshipment with the normal transit time of 14 days extended to 45-60 days. However, the major concern about Japanese cargoes is the safeguard duty and there are expectations that it could be implemented from April. Expectations are for a 7-10% duty.”

Demand cools slightly

Traditionally robust demand from the agricultural and construction sectors tends to support PVC prices during the first quarter along with the desire of businesses to close their books for the financial year on a strong note. The Indian fiscal year ends in March.

However, a local trader noted, “Downstream pipe demand has cooled down over the past few weeks mainly due to unseasonal rains, cold winter, and farmers’ protests. But most players expect demand to be robust by the end of January as the harvesting season starts.”

Import PVC prices into India have been more subdued over the past two weeks and currently stand at $1420/ton CIF, according to ChemOrbis Price Index data. Domestic prices remain robust, with a major local producer lifting its prices by INR4,000/ton ($55/ton) to INR120,500/ton ($1642/ton) on FD basis last week.