India’s PVC market remains bearish amid an intense monsoon

PVC markets in India are expected to see a bearish run in August, hit by the ongoing rainy season, which typically affects demand, apart from ample availability. After surging by 23% from mid-May to end-June, PVC K67 prices have lost up to 8% of their CIF values in India, as fright rates, which had surged since April, began to decline after mid-June. Meanwhile, import prices have lost 4% in Southeast Asia and 2% in China over the same period.

Import prices of ethylene-based PVC K67-68 in India are currently noted at $830-910/ton, while that in Southeast Asia are at $730-840/ton and in China at $770-830/ton, all CIF, cash. At the same time, export prices were noted at $710-740/ton for the ethylene-based grade and $700-720/ton for the acetylene-based one, both on a FOB China, cash basis.

Players defer purchases as monsoon rages

As the freight premiums that acted on the PVC markets from mid-April to mid-June saw a meltdown, perceptions of continuing ample supplies combined with demand in downstream markets staying slumped made it difficult for sellers to stick to the higher levels.

The ongoing intense monsoon means that players in India, the largest PVC buyer in the world, could defer their purchases by a few more weeks. Heavy rainfall along the west coast of India in July has resulted in an excess of nearly 2% above the country’s long-period monsoon rainfall average. The southwest monsoon has been particularly active over India’s southern states, where it has surpassed 24% of the long-period average until July 30. This has led to the temporary stoppage of construction projects, impacting PVC demand. Torrential rains have also been reported in China and Southeast Asia.

Ample supplies keep buyers waiting

Availability in most markets is thought to be ample. In India, for instance, “nobody is worried about availability for the near term,” said a trader based in Mumbai. “There is enough in the warehouses for immediate requirements,” he added.

At the same time, players noted that ample availability has kept pressuring export prices from China, as well as import prices to India and Southeast Asia, especially at the lower ends of pricing ranges. In northern China, a source at a major producer said, “Supply has lengthened due to several plants restarting after maintenance shutdowns. Demand has remained anemic within China. As domestic prices have trended downwards this week, we’ve reduced FOB prices too.”

Anti-dumping, standards decisions round the corner

Meanwhile, major decisions regarding a governmental anti-dumping investigation and new PVC standards to be set by the Bureau of Indian Standards (BIS) are expected shortly, keeping players on edge.

“There is near unanimity that most Chinese producers have not been able to tweak their plant configurations to suit the required standards. While a section of the market believes we may see an extension, most players say official feelers suggest that is unlikely,” an Indian trader said.

Demand slump stays a persistent factor

However, falling freight rates have given Chinese players an opportunity to keep focusing on India. In the current week, import prices of Chinese-origin PVC K67-68 fell to about $830/ton, with unconfirmed reports of deals done at $820/ton CIF India.

Another Indian trader noted that demand has not seen a major change over the last few months. “When we saw prices rise beginning end-April, it was due to rising freight rates, whereas demand remained muted. That slump in demand continues to impact prices as the freight rate rally ended more than a month ago,” he added.