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PVC sellers’ India pricing strategy may differ from other Asian markets

by Abdul Hadhi -
  • 18/11/2020 (04:10)
The PVC price trend in Asia may start to diverge going into December and the first quarter of 2021 as demand patterns vary between India, China and Southeast Asia.

Recently announced December offers to Asia by a major Taiwanese producer - which often sets the tone for the market - reflect that thinking. The producer increased offers by $100/ton to $1220/ton CIF India; by $40/ton to $1100/ton CFR China and by $30/ton to the rest of Asia.

For November, it had increased offers by $100/ton to India and by $90/ton to China.

The higher offers for December marked the seventh straight month of increases by the Taiwanese major from June when most countries came out of COVID-19 lockdowns.

In addition to demand recovery post lockdown, the Taiwanese major’s higher offers in recent months have been driven by tight supply and high freight rates due to limited vessel availability.

Supply from the US Gulf has been interrupted as a spate of hurricanes led to force majeures by Westlake and Formosa. The situation was worsened by force majeures by a number of European plants.

Indian demand to continue into January-March quarter

Saying there will likely be further price hikes following the Taiwanese major’s December offers, an Indian trader added, “Global PVC prices have been further boosted and will likely continue to stay at sky-high levels due to the global dearth of supply. Without deep sea US Gulf cargoes on offer to Asia, and possibly only able to arrive in January 2021, there will be no respite for buyers in the near term.”

Import PVC prices are also likely to be supported by demand which is traditionally strong in the January-March quarter.

Requirements from the agricultural and construction sectors tend to be robust in the January to March quarter as the fiscal year-end for most businesses in India is end-March and would like to close their books for the year on a strong note, according to traders.

Chinese demand not as strong in first quarter

Demand from China during the first quarter is unlikely to be as strong as India as that corresponds to winter when agricultural and construction activity tends to be much reduced.

Additionally, ice-clogged ports make shipping more difficult as well as expensive while snow covered roads tend to slow road transport by trucks.

Another factor likely to subdue demand during the period is the Chinese New Year holidays which usually occurs in January or February. The lengthy holidays tend to create a business lull as most workers head to their hometowns for the holidays.

Chinese New Year is also celebrated in several countries in Southeast Asia and also tends to slow business activity in that region.

After the year-end demand, the first quarter is also usually rather slow for business in Southeast Asia, market players added.
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