Indian PVC players discuss post-Diwali outlook

In India, major PVC producers were reported to have sold out their allocations since buyers conceded to pay the November increases although initially they had shown some resistance. Sellers concurred that hike expectations from a local PVC producer also pushed buyers to accept the new increases ahead of the approaching Diwali holidays. Nowadays, players started to reveal their expectations for the period following the Diwali holidays which will officially take place between October 30 and November 3 with most players expecting to see improved demand after the holidays.

A source from a Japanese producer said that they sold out their allocation in India and another Japanese producer and the Taiwanese major also sold out their quotas in the country. “Initially, Indian buyers were reluctant to buy at the new levels as they found the major’s $40/ton hike attempt quite high, but they had to make purchases as players’ inventory levels were quite low as most of them had skipped purchasing last month with expectations of seeing lower prices. For December and January, the Taiwanese major will have limited allocation and the PVC market will remain on a firm note. From Japan, no supply issue is reported,” added the source.

“This week, the market is in holiday mood due to the upcoming Diwali holidays. Therefore, demand has slowed recently. However, after the holidays, demand is expected to pick up again and that is the reason why stocking activities have increased on the traders’ side. Although buyers initially showed resistance to the Taiwanese major’s $40/ton hike on its November shipment offers, the producer has already sold out their allocation to the country. Buyers had to make purchases in order to meet their needs and mostly showed an interest in the producer’s cargoes as these small players do not have much negotiation power and felt insecure as to whether they could get materials. Nowadays, US suppliers are also targeting the Indian PVC market in order to achieve better netbacks,” commented a trader.

A second trader also reported, “Although the Taiwanese producer’s hike amount on its November offers exceeded the buyers’ expectations, buyers had to buy as the Indian PVC market meets 50% of its local demand from imports. Nowadays, a lot of buyers have started to source deep sea cargoes again, so a high volume of cargoes from Brazil, Russia, Mexico, and the US will arrive in December and January. The major’s price increase was related to supply rather than demand.”

In addition, there is a market rumor that a local producer has implemented increases on its new November prices which will be effective as of November 1.

The Taiwanese major’s feedstock shortage stemming from CPC’s cracker shutdown and the shutdown news at South Korea’s LG Chemical’s 590,000 tons/year PVC plant are other bullish factors that keep sellers’ hand strong. The South Korean producer will shut its plant by mid-November for a three-week turnaround.

However, most buyers concur that increase amounts should be lower than $40/ton as buyers are not likely to accept a $40/ton hike for another month. On the other side, some argue that weak ethylene prices cast a shadow on firm expectations.