PVC rally roars back in Asia as supply worries mount

Import PVC prices in India, China, and SE Asia witnessed relentless hikes from mid-May to late December last year amid a global supply crunch. This longest-ever price rally lost speed in January and prices corrected from record highs. The uptrend was soon renewed in early February while it has recently turned back into a roaring rally in the aftermath of weather-driven shutdowns in the US.

Wintry weather in the US Gulf forced petrochemical producers to shut their plants last week. Formosa Plastic USA declared force on PVC supplies from its Baton Rouge and Point Comfort plants on February 18 after shutting them down earlier in the week. The plants have a total production capacity of around 1.3 million tons/year. Another major producer - Westlake Chemicals - also declared force majeure on PVC supplies from its three plants located in the affected area.

“Supply disruptions in the US have exacerbated the existing state of supply tightness across the globe. The markets, meanwhile, continue to struggle with a shipping turmoil amid container shortages. Mounting supply worries are fuelling the PVC rally,” players said.

Local and import prices surge in China after holiday

Players in China have found a more bullish market since they returned to their desks from the Lunar New Year holidays late last week. Oil-driven gains in PVC futures on the Dalian Commodity Exchange boosted market sentiment at the start of this week and pushed spot prices significantly higher in the local market.

Data from ChemOrbis Price Index revealed that the weekly average of local ethylene-based PVC K67 prices hit a fresh record high of CNY9350/ton ($1274/ton without VAT) ex-warehouse China, cash.

Import prices, meanwhile, witnessed three-digit hikes this week, with sellers blaming a potential global supply crisis led by the unexpected shutdowns in the US.

“A fear over increasingly tight supplies has grown across the board, which has led buyers in China to resume their purchases for both spot and contractual volumes this week,” traders noted.

Import prices hit a new all-time high in India

According to ChemOrbis Price Index data, the weekly average of import PVC K67 prices into India surged %6 from two weeks ago to hit a fresh record high of $1500/ton CIF.

“We have hiked spot offers sharply this week amid the US Gulf supply disruptions, which have triggered sky high prices across most petrochemicals. There is unlikely to be any deep-sea cargo arrivals, ex-USG or Europe as all regions are short currently. We are mostly focused on exporting to India, Europe and the Middle East where prices are much higher,” a source at a South Korean producer explained.

With summer agriculture demand emerging in India, traders expect more demand as buyers seek to avoid much higher prices later.



Expectations for April PVC announcement start to be voiced

Players across all regional markets expect the major Taiwanese producer to announce its April prices with increases from March over the next two weeks.

The renewed shortages, meanwhile, has sparked debate over the size of the expected hike in April offers.

A Southeast Asian converter noted talk of a hike of up to $200/ton but a Northeast Asian trader said that was unlikely, while a source at a Japanese producer said suppliers will need more time to assess the current supply and demand scenario for April offers.