Sentiment shifts in Asia PVC markets after almost two months

Having stayed bearish since mid-April, the sentiment across Asia PVC markets has improved recently, boosted by the positivity around easing Covid-19 curbs in China. The fading sell-off from Chinese exportersin late May was also a signal of this shift in sentiment coming.

Although demand recovery post lockdown has remained slow, stronger Dalian futures values and firmer energy values have supported the sentiment along with the Chinese government’s announcement of an economic stimulus package.

The revival of the China PVC market has had a direct impact on the key export destinations including India, Southeast Asia and Egypt, which were under heavy pressure from Chinese oversupply during this period.

Export offers propelled higher by local prices in China

In China, local PVC prices have snapped an 8-week downtrend this week, increasing CNY200-250/ton ($30-37/ton) to stand at CNY8,900-9,000/ton ($1180-1194/ton without VAT) for ethylene-based PVC, and CNY8,700-8,800/ton ($1154-1167/ton without VAT) for acetylene-based PVC, all on ex-warehouse China, cash including VAT basis.

Local prices were mainly supported by the rise in Dalian futures values. September PVC futures on the Dalian Commodity Exchange were up by CNY380/ton ($57/ton) on the week as of June 8. A Chinese trader commented, “Spot PVC offers have increased this week due to firmer futures prices. The market sentiment has improved with relaxing Covid-19 curbs. However, the done deal is limited and mostly concluded at the lower price range.”

Firmer local PVC prices in China have led to a rise in export offers out of the country too, with India and Southeast Asia moving slightly higher this week. A regional trader said, “This week, Chinese offers have edged higher for late June to July shipment on the heels of the rise in local prices in the country. India remains one of the most preferred export outlets, meanwhile.”

Spot prices for ethylene-based PVC were assessed $10-20/ton higher from last week at $1210-1240/ton while acetylene-based PVC prices were assessed $20-40/ton higher at $1160-1200/ton, all on FOB China, cash basis.

India market rebounds cautiously

India PVC markets have edged higher recently in line with the slight firming in FOB China offers, despite the monsoon season. Expectations of a demand recovery in China mean reduced pressure from Chinese exports.

In India, import PVC offers are flat to up by $20/ton on the week to be assessed at $1340-1380/ton CIF, cash. Chinese June-July loading 3000-4000 tonnes of ethylene-based shipments of PVC K67 were offered to Indian markets at $1340-1360/ton CIF. The local market also reacted to the news, by rising INR1,000-2,000/ton on the week.

“Even before the higher offers were reported in the market, traders were bidding at $20-30/ton higher than in the previous week,” a Mumbai-based trader said. “This reflected a change in sentiment. Buyers have kept away from the polymer markets for too long, expecting prices to keep on falling and this has resulted in some tightness in the markets, “ he added.



Southeast Asia PVC markets follow suit

Meanwhile, in Southeast Asia, import prices for all origins were assessed stable to $20/ton higher from last week at $1250-1320/ton CIF, cash.

Southeast Asian buyers mostly kept to the sidelines but suppliers raised prices, backed by the stronger sentiment in China. “Prices to Southeast Asia have risen by about $40/ton,” said a Chinese trader.

Egypt’s PVC market shoots up

Aggressive Chinese offers dragged Egypt’s PVC market constantly lower in the past 7 weeks, although the pressure somewhat eased in the last two weeks. Along with the improving sentiment in China, players in Egypt reported receiving $100/ton higher offers from China this week at $1500-1550/ton CIF, cash, subject to 2% duty.

Although buyers remained hesitant to secure cargoes at the new levels, they widely reported the support Chinese sellers see from easing stock pressure, possibly better demand and higher oil prices.