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Taiwanese PVC major’s Sept hike exceeds expectations

by ChemOrbis Editorial Team -
  • 16/08/2017 (09:08)
Players operating in Asian PVC markets are mostly surprised by the significant hike amount applied by a Taiwanese major on its September announcement. Market players reported that the producer increased its new prices by $60/ton to China, Southeast Asia and India when compared to its most recent August levels, which came with a relatively more moderate increase of $20/ton following two consecutive months of rollovers in June and July.

Although a few players voiced similar expectations to the major’s hike amount as was noted earlier in ChemOrbis Headline Story Taiwanese major’s Sept PVC pricing signals hikes , initial firming expectations were mostly limited to a range of $20-40/ton. They were relatively modest given the ongoing stagnancy of demand in the Indian market in the midst of the rainy season as well as the GST implementation.

Following the major’s hike decision, players shared their comments about how the market will respond to such an increase.

In India, a converter in Mumbai argued that the market is too weak to absorb such a significant hike. “We think the price is quite high to accept. Demand is still slow. Therefore, we prefer to observe done deal levels before taking any action.”

In Southeast Asia, a trader in Indonesia noted, “We are surprised by the Taiwanese major’s $60/ton increase for September. We think this is a quite large amount for Southeast Asia as the market in the region is not strong at all in the August-September period.”

A Jakarta-based PVC compounder said, “The hike amount is beyond our initial estimations of $20-30/ton increase. We think this level is not likely to see acceptance in the local market considering the unsupportive demand across the region.”

In China, a Shanghai-based distributor also stated that the major’s hike amount is more than they expected. “We are planning to monitor the done deal levels of the Taiwanese major first. It looks like the producer’s September allocation is not much,” he added.

A trader also said, “We found the producer’s new prices too high. Therefore, before we decide to make any purchases, we prefer to wait and see the major’s sales levels as well as the slight weakness of the local PVC market for the past two days.”

Meanwhile, January PVC futures on the Dalian Commodity Exchange witnessed a weekly decline of CNY360/ton ($54/ton) as of August 15. Although the recent softening of futures exerts a slight pressure on China’s local PVC market, prices are mostly expected to remain firm in the near term given several bullish factors in place including low supplies amidst strict environmental inspections as well as shutdowns and improving demand in line with the manufacturing season.
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