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Strong netbacks and demand trigger exodus of PVC from China to export markets

by Merve Sezgün -
  • 01/10/2020 (08:29)
Players noted that PVC producers in China have been ramping up production to increase their export volumes amid tempting netbacks offered by several markets. More Chinese PVC offers have been showing up in India, Southeast Asia and Turkey recently, while a player in Europe also reported that he received an offer for Chinese acetylene-based PVC this week.

With the lengthy National Day holiday fast approaching, players in export markets expect an increased number of Chinese PVC offers next week as the country will see a lull in business.

A few players in China also said, “Local PVC demand had been robust since around late April while it has tapered off as buyers have started to leave their desks for the holidays.
Sentiment remains firm owing to lingering supply limitations across the globe, yet players concur that domestic activity will significantly decline next week. In such an environment, Chinese producers may focus more on export sales.”

Meanwhile, a few PVC suppliers in China reported that demand from most export markets was vivid. PVC offers on FOB China, cash basis have recently been reported at $950-960/ton for ethylene-based K67 and at $920-930/ton for acetylene-based K67.

India attracts Chinese acetylene-based PVC amid tightness

The supply tightness has attracted Chinese material to India where demand is likely to increase as the monsoon season subsides.

On the side of Chinese buyers, meanwhile, India has been a profitable outlet due to higher prices and demand, despite the ongoing political tensions between the two countries.

Deals for acetylene-based PVC K67 have been heard at $960-970/ton CIF India, subject to a $61/ton antidumping duty, cash for a couple of weeks.

“We think that Chinese producers will continue to focus on export markets in the near term due to the business lull in their own market amid the week-long holidays,” an Indian trader opined.

Dutiable PVC prices to Turkey stand $160/ton above China

Data from ChemOrbis Price Index reveal that the weekly average of PVC K67 prices on CIF China basis is hovering around its highest level of $997/ton in six years ahead of the National Day holidays. The market has jumped 60% since it hit the bottom in late April.

Still, PVC K67 prices have seen higher levels in other markets so far.

PVC prices in Turkey have seen sharp and abrupt increases of around $200/ton in one month due to a combination of the absence of European and US supply sources and active demand. Since the bottom was reached in late April, the weekly average of K67 prices on CIF Turkey basis has surged 92%. According to ChemOrbis data, prices are now standing at almost a decade-high both for dutiable and duty-free origins.

The gap between CIF China and CIF Turkey dutiable prices, meanwhile, has moved slightly above $160/ton, the highest since ChemOrbis began keeping records in 2008.

Players said an increased number of irregular PVC origins, including Chinese, showing up in Turkey inevitably as global suppliers turned their focus to Turkey, where PVC provided record-high netbacks.

Chinese ethylene-based PVC K67 was reported at $1120/ton CIF Turkey, subject to a 6.5% customs duty, cash. “Irregular origins have not grabbed buying interest amid a mounting resistance towards the prevailing highs,” players noted.

In the meantime, acetylene-based PVC K67 from China has showed up well below the $1100/ton threshold as of mid-week.
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