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Taiwanese major’s April PVC offers get lukewarm response from Asian players

by Thi Huong Nguyen - thihuongnguyen@chemorbis.com
  • 20/03/2024 (01:43)
The latest hikes in Asian PVC benchmark pricing by a major Taiwanese producer have caught market players by surprise, since expectations mostly called for rollovers to slight decreases due to unfavorable market conditions. Therefore, the April offers have seen a lack of enthusiasm from regional players so far, regardless of a potential shortage of ethylene supply and surging energy markets.

The Taiwanese major producer notified increases of $10/ton on its April PVC offers to Asian markets. This marks the third consecutive month of price hikes, following increases of $20/ton for February and $30/ton for March shipments.

Weak fundamentals hammer interest in additional hikes

Demand weakness hits sentiment

Buying activity has been limited across Asia as a result of a weaker-than-expected recovery in downstream demand, especially in China’s sluggish real estate sector. Meanwhile, converters have had comfortable materials on hand, leading to a muted purchase appetite and a wait-and-see approach.

A trader based in China reported, “The lack of new real estate and infrastructure projects has resulted in a limited demand for PVC building materials, with purchases done on a need basis.”

Markets still struggle with ample inventories

Although scheduled maintenance turnarounds in China might bring a glimmer of hope for potentially reducing the availability of Chinese cargoes, a supply overhang has remained on the table. “The PVC markets are expected to be oversupplied in the short term due to tepid demand and ample stockpiles in warehouses,” the China-based trader added.

Looking at India, the world’s largest PVC buyer, the markets are reportedly flooded with low-priced cargoes, which are mostly Chinese shipments bought at levels below the mid-$700s/ton. Consequently, the recent hikes in April offers have met a lukewarm response, with buyers showing resistance to higher pricing.

Last week, an Indian trader highlighted, “There was significant availability inside India, discouraging players from purchases in the import market.” Another compatriot trader echoed the same situation, saying, “Most local buyers are focusing on clearing the domestic slack. They are likely to enter the import market only after the market is tighter.”

March allocation yet to be sold out

There are some market talks indicating that the major producer has yet to sell out its March allocation for Asian markets. As a result, the latest move has further dampened purchase enthusiasm among buyers, according to market participants.

In fact, the major producer had conceded to offering discounts in March deals in Vietnam, as it struggled to sell out its monthly allocation across regional markets, including India. Despite announcing price increases earlier in the month, with a $30/ton hike from February, weak demand prompted the producer to lower prices. Deals for March shipments in Vietnam were closed at $760/ton CIF, indicating a $30/ton decrease from the initial announcement.

Regional suppliers mostly look the other way

The Taiwanese major’s levels have long been a benchmark for PVC pricing across Asian markets. Most regional sellers traditionally prefer to follow in its footsteps, but this may not be the case for this month.

Among numerous suppliers, two Chinese producers have opted for stable export prices in the range of $720-750/ton FOB China, with sources at the producers pointing to unfavorable supply-demand dynamics.

As a side note, earlier expectations for lower April offers led to some drops in Southeast Asia, while the correction has been under doubt on the back of lackluster demand. “At the beginning of the week, some traders revised down local PVC prices, as they expect drops in the April benchmark. However, the fact proves the opposite with $10/ton increases. We’re not sure if local prices will experience upward adjustments since weak demand might hinder acceptance of higher prices,” said a Vietnamese converter.
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