Is China’s panic sell-off in PVC fading?

Chinese PVC prices have been a pressure point in several markets for around two months with aggressive prices particularly in India and Egypt.

This week, Indian players reported ethylene-based offers from China as low as $1340/ton CIF India. They imply a decrease of $30/ton from last week and $300/ton from early April.

Likewise, Egyptian players received Chinese origin ethylene-based offers at $1440-1490/ton, suggesting a weekly decline of $80-90/ton. When compared to early April, the decrease is much larger at $330/ton.

Despite these weekly decreases in Chinese PVC offers, some players in India have pointed out that sellers of Chinese-origin shipments don’t seem to be facing as much pressure as in the previous weeks to offer too low.

The expectation that China-India freight rates may rise from the current $170-180/ton shortly after Shanghai starts easing the COVID lockdowns beginning June 1 is cited as the major reason for Chinese sellers’ easing sales pressure.

A trader in China also affirmed that PVC exports have somewhat slowed down as supply is slightly reduced inside given the increasing number of turnarounds for PVC plants.

Nevertheless, buyers do not seem to be bothered by this news as the monsoon is setting in a couple of days in India and the US dollar strength continues to keep pressure on import prices across the board.

Plus, to what degree Chinese sellers have managed to reduce the current supply slack inside China remains uncertain. Although the opening up of Shanghai offers glimmers of hope, Tianjin is now facing lockdowns, which suggests that demand may remain subdued inside China and exports may continue albeit to a lesser degree.

Statistics reveal that China’s main export destination for PVC remains India, which forms one fourth of overall exports in the January-April period. It is followed by Vietnam and Turkey with respective shares of 10% and slightly more than 6% in overall exports.