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Taiwanese major hikes Aug PVC offers to Asia as limited availability outweighs monsoon effect

by Pınar Polat -
  • 15/07/2020 (10:20)
After lifting its July PVC offers by $90-100/ton to Asian markets, a major Taiwanese producer applied another round of increases for August, albeit in smaller amounts of $20/ton. This was initially anticipated by regional players.

Details about August pricing

•   Fresh PVC K 67-68 offers up $20/ton at $860/ton CIF India and at $810/ton CIF China
•   No volume discount is available
•   Only 50% of the major’s regular monthly allocation is released for August

Why another round of increases?

The major producer’s limited supply amid a planned maintenance at its plant is cited as the main reason behind the recent hike despite the monsoon effect and fears over another wave of COVID-19 infections in India.

Apart from this, the regional tightness across Asia and the strength in China’s local PVC market also contributed to the major producer’s decision.

Local PVC prices in China have been on a steady to firmer trend for the past three months, gaining around 21-22% according to ChemOrbis data mainly with support from robust demand and tighter availability inside the country.

The cost side has also been supportive. According to ChemOrbis Price Wizard, spot VCM prices on CFR China basis have recently stabilized at their highest levels seen since early March.

Asian suppliers already follow suit

A few South Korean producers and a Japanese producer applied monthly/weekly increases on their PVC offers to India right after the major producer’s hike decision.

“We think the regional supply will remain tight across Asia throughout August considering shutdowns in Taiwan, China and Japan. The demand side is also expected to perform well next month,” a source from the Japanese producer commented.

For further up-to-date VCM and PVC production news, please see PVC Production News (For members only)

Meanwhile, a few traders said that the Taiwanese major already sold out its limited August quota to India within the very same day of the announcement.

CIF India PVC prices climb to 4-month high

According to the ChemOrbis Price Index, the weekly average of PVC prices on CIF India basis has reached $882/ton recently, the highest level since mid-March following August hikes.

Except for a week-long softening in late June, prices have followed a steadily firmer trend since early May and increased $242/ton in total, data also suggest.

China receives no allocation for August

Some players reported that the major producer revealed a price level to China for August, however they have no allocations to the country in the midst of the rising political tension between China and Taiwan.

"Previously, Taiwanese cargoes only stated ’Taiwan’ in their shipping documents. Now they are required to state ’Taiwan, ROC (Republic of China)’. For now, the major Taiwanese producer does not have any allocation to the China market but it is unclear for the future, depending on the political tension between the two countries," a source from a regional producer commented.
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