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PVC buyers’ resistance to sharp April hikes grows in SE Asia

by Abdul Hadhi - ahadhi@chemorbis.com
  • 23/03/2021 (16:29)
While tight PVC supply has prompted significant price hikes, industry players in Southeast Asia are increasingly worried about the acceptability of sharply higher April offers amid growing resistance from end-product manufacturers across the region.

A major Taiwanese producer - which often sets the tone for the market - recently lifted its April offers to Asia by $300/ton, which marked an 11th consecutive monthly price hike. The hefty hike was prompted by supply tightened by turnarounds in Asia, a lack of deep-sea cargoes, summer agriculture demand in India and increasing construction activity in China after winter.

The Taiwanese major’s lead was replicated by other producers in the market, including those in Southeast Asia. An Indonesian producer raised its offers to Malaysia and Singapore by $250-280/ton while a Thai producer lifted its offers to Malaysia by $315-325/ton for April.

Import PVC K67 prices rose 6% last week to a fresh record high of $1580/ton CIF SEA, according to the weekly average data from ChemOrbis Price Index.

SEA sellers uncertain about buyer interest

“With these high prices, many buyers are not interested as their customers can’t accept it. This may end up with many end-product makers having to shut down or reduce operating rates. We are lucky as our plants can run other products or replace with substitutes even if we stop PVC lines,” a Thailand-based converter said.

High PVC prices have prompted some users in the region to substitute it with HDPE pipes.

A Vietnam-based supplier added that he hasn’t decided on making April offers as he needs to understand how much buyers can accept. “If buyers really can’t accept, they might consume less or find replacement material. So far, market demand is not clear and buyers are waiting for more offers to decide whether to buy or skip,” he explained.

Tracking import offers, domestic prices in Thailand rose 16% last week to $1549/ton, while in Vietnam, they increased by 26% to $1820/ton - both on FD, cash excluding VAT basis.

Thai buyers may extend holidays

In another way to avoid the high prices, some buyers may take lengthy holidays.

The Thailand-based converter said, “The Thai New Year is close by. This time, some converters may prolong the holiday. Normally, they will take a one-week holiday but this time they may take up to a month because of raw material prices. We might also take a longer holiday to wait for prices to fall.”

Thailand’s New Year or Songkran takes place on April 13 with the holiday period extending for longer to allow everyone to return to their hometowns for the celebrations.
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