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Jan expectations take shape amid opposing factors in Asian PVC markets

by Merve Sezgün -
by Abdul Hadhi -
  • 28/11/2019 (04:02)
While players in Asia’s PVC markets have wrapped up their December business with decreases of $10/ton from November, initial expectations regarding a major Taiwanese producer’s January prices have begun to take shape in the midst of opposing factors.

CIF China/India prices stable at 7 month-low

Import PVC prices into China and India have recently been mostly stable at their lowest levels since April, according to the weekly average data from ChemOrbis Price Index. In Southeast Asia, meanwhile, the import market has hit its lowest level since June 2017.

“Prices are largely unchanged as most players are now waiting on the sidelines for the major Taiwanese producer’s price announcement for January,” a trader in China said.

The major producer approached the Chinese market with modest decreases for the past three months while applying declines on its offers to India for the past two months.

Expectations offer a mixed bag

Players reported that market sentiment was cautious amid fresh signals that the major producer may lower offers for January in contrast to earlier hopes for a rollover or slight increases.

A regional trader commented, “Sentiment was firm earlier in the week, with many players voicing January expectations calling for stable to higher prices. Improving demand and the prolonged tightness in Asia were cited as the main drivers behind these initial expectations, which, however, faded away as some opposing factors gained prominence.

Indian demand improves, but market pressured by deep-sea cargoes

Despite strengthening demand ahead of the traditionally busy first quarter, India’s PVC market has remained subdued amid increasing overseas supply particularly from the US and Europe.

“Demand traditionally improves going into the first quarter, however the pickup has been somewhat slow this time round. The market is being pressured by competitively-priced deep-sea cargoes for European and the US origins,” an Indian converter noted.

Low season overshadows bullish developments in China

The improving demand scenario also gave rise to expectations of a rollover or increase in January offers to China mostly at the start of the week. Tight supplies particularly for acetylene based PVC, combined with firmer PVC futures encouraged such expectations.

“December allocations by Taiwanese, Japanese and South Korean producers have been sold out. With demand increasing ahead of the Chinese New Year holiday, a decrease in January offers is highly unlikely,” a source at a Japanese producer said early in the week.

On the other side of the coin, several players were still hesitant to talk about a shift in the import PVC trend pointing to the lingering uncertainty over the trade war, economic concerns as well as the impending winter months during which the Chinese market tends to experience a significant slowdown in activity.
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