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Southeast Asian PVC markets supported by Indian demand

by Abdul Hadhi -
  • 02/06/2020 (03:39)
Import PVC prices in Southeast Asia are mostly holding steady despite the fact that Thailand, the Philippines and Singapore are all yet to ease their COVID-19 lockdowns. This relevantly balanced situation was largely due to lesser volumes being allocated for Southeast Asia, with pent-up demand in India drawing supply away from the other regional markets.

Prices largely stabilize after rebounding from 11-year low

Average weekly prices for PVC K67-68 have stabilized at around $705/ton CIF SEA from mid-May after rebounding from the $630/ton low early in the month. Much of the region remains in various stages of COVID-19 related lockdowns apart from Vietnam and countries such as Indonesia and Malaysia have seen trade quieten because of the Eid holidays.

The $630/ton early May was the lowest price recorded since early 2009, based on ChemOrbis Price Index data.

Players lament tight availability from Taiwan, Japan, US

A source at a Southeast Asian producer said, “Our latest export offers for June shipment went up by $50-60/ton for the region. Major customers in Malaysia and Singapore might accept $690/ton CIF. We are also seeing deals being concluded at $680-690/ton in Vietnam and have almost finished our allocation for that market due to good demand.”

He explained further that a major Taiwanese producer is “not aggressive at all in Southeast Asia while Japanese cargo is largely limited to one supplier” with traders in India taking up almost all the Taiwanese major’s allocation within a short period.

A Vietnam-based converter added that there were no offers for US material as well and noted that supply was tight.

Monsoon may temper Indian demand

After a month of no allocations from the Taiwanese major and a significant tightening of domestic PVC supply in India due to the extended lockdown, pent-up demand saw June allocation being snapped up quickly.

The Taiwanese major had earlier hiked June offers to Asia by $40/ton. The hike was followed by similar hikes by other foreign as well as domestic suppliers.

A source at an Indian domestic producer said, “Buyers are also purchasing import cargoes at higher levels. Current offers for Asian origins are heard at around $740-760/ton CIF, while deep sea cargoes heading into India for June arrival are probably at similar levels.”

Nonetheless, the monsoon season, which traditionally sees slow demand, has started in India and this may temper market expectations going forward. The monsoon stretches from June to September with heavy rains slowing construction and agricultural activity, which are key sectors for PVC pipes. Additionally, choppy seas also make loading and unloading cargoes more difficult at ports.
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