PVC markets hit one-and-a-half year low in India

India’s import PVC pricing ideas and domestic offers sank further as ample supplies of the Chinese acetylene-based product in the local market continued to cause a supply slack. The start of the southwest monsoon in India and a recent 2.5 percentage point cut in customs duty on import PVC have also pushed local buying ideas lower.

As tracked by ChemOrbis Price Wizard, both India’s import and domestic prices of the ethylene-based K67 grade have fallen to their lowest levels since December 2020, or almost 19-month lows. An Indian major applied a new price cut this week.



Slump in carbide-based PVC offers prompts slide in C2-based prices too

Early in the week, traders reported Chinese carbide-based material being offered below INR116,000/ton ($1498/ton) on an ex-warehouse, cash not inc VAT basis, with deals likely around INR115,000/ton ($1485/ton). According to them, there’s typically a INR6000-7000/ton ($77-90/ton) delta between ethylene-based and acetylene-based K67. This meant notional prices for the ethylene-based K67 in the low-INR120,000s/ton.

Sure enough, a Mumbai-based PVC trader reported imported material from a major Taiwanese producer being offered at INR120,000-121,000/ton ($1549-1562/ton), ex-warehouse, cash not inc VAT.

And, a major Indian producer also reduced prices by INR6,000/ton ($77/ton), or by about 5%, with effect from 1 June, to about $124,000/ton, just about a couple of weeks after it applied a INR10,000/ton ($129/ton) cut on 19 May. The latest move has totalled the price cuts made by the producer to INR22,000/ton ($283/ton) since April 19, when it first reduced prices after two months of hikes..

Traders said the latest price cut could be a move by the major producer to try and stem the inflow of low-priced Chinese imports. “But it remains to be seen how effective the move will be against Chinese acetylene-based PVC, which seems to have swamped the Indian market currently,” a trader said.

Traders have estimated that acetylene-based grades account for more than 50% of the current imports of PVC into India as prices have crashed lately.

Duty-free Japanese offers also face pressure from reduced duties

A slight reduction in the customs duty on PVC imports from the previous 10% to the current 7.5% also played a part in the falling local prices as shipments booked two months ago and arriving now would be imposed lesser duty than earlier envisaged. Non-dutiable import cargoes from Japan, which are priced based on dutiable cargoes, would have to be priced slightly lower, considering the lowering of the customs duty.

Chinese optimism finds no traction in India

Calling it “a vicious market cycle”, another Indian trader said that in India, the largest importer of PVC in the world, “falling local markets would put pressure on import prices, too.”

Currently no one was talking about a turnaround on the back of lockdowns being eased in China.“Last week, India did not see any rise in import offers, but prices of Chinese ethylene-based shipments were raised to the mid-$1400s/CIF Jebel Ali, Dubai. We typically see similar import prices to Jebel Ali and to west coast India. But this week, we see firm offers currently for Chinese ethylene-based PVC K67 at $1330-1340/ton CIF India. It’s a big change,” he added.

Traders said this has resulted in the delta between the import pricing of ethylene- and acetylene-based PVC shrinking to as low as $20-30/ton. Chinese carbide-based offers are currently heard in a $1310-1320/ton range.

“I won’t call it a bottomless pit. But we don’t see a great deal of optimism in the market currently. And, it’s quite difficult at this point in time to predict when the market can turn around,” the Mumbai-based trader said.

Monsoon, dollar strength to keep up pressure on prices

Demand remains weak as the monsoon has already set in on the southern Indian state of Kerala and is expected to spread out in the country over three to four months. This is likely to keep a cap on domestic consumption, while the rising US dollar may also have a bearish impact on imports.

But the planned return of Shanghai and other industrial hubs from COVID lockdowns will be watched closely to see whether Chinese PVC producers can find a greater outlet in the domestic market. Nearly a month has passed since South Korean and Japanese sellers have offered PVC to India, with the players waiting for an expected Chinese turnaround. “Meanwhile, the Chinese are currently the only game in town,” the trader said.

Still some have pointed to offers and deals from a South Korean supplier at offers of ethylene-based k67 close to the low end of the latest ChemOrbis price assessments, competing with Chinese offers. “These offers have been made on a strictly confidential basis and have mostly been under the radar,” a market player said.

Anti-dumping duties may return, speculate traders

Meanwhile, as Chinese supplies overwhelm the Indian markets, there is currently talk of the Indian government bringing back the anti-dumping duties (ADD) on PVC imports from China and a few other exporting countries. India’s ADD on PVC from the US, Thailand and China expired on February 12 as the government did not issue any new notification for an extension.

“One of the domestic producers has already complained about imports adversely affecting local producers. We’ve heard the government is thinking of reimposing the ADD, although this may be unlikely this year,” a trader said.