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Taiwanese major’s Dec PVC price cuts deeper than expected

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 17/11/2021 (02:55)
A decrease in December offers notified by a major Taiwanese producer to Asian buyers earlier on Tuesday was expected but some players are surprised by the magnitude, traders said.

As the Taiwanese major’s monthly pricing is considered a benchmark, the $150/ton decline is expected to prompt other sellers in Northeast Asia to lower their offers as well.

The producer’s new PVC K67-68 offers stand at $1710/ton CIF India and $1490/ton CFR China, with no volume discount on offer. The Taiwanese major has also cut its export prices by $150/ton to $1460/ton FOB Taiwan.

“We were confident that the company would not hike December prices, after applying significant cumulative hikes in the previous three months,” an Indian trader said. “We thought they would roll over, or probably make a token decrease of about $50/ton. But this has definitely come as a huge surprise,” he added.

The producer’s previous three price announcements indicated cumulative increases of $530/ton to India and $430/ton to China.

The gap between Taiwanese major and prevailing market level shrinks

In comparison, import PVC K67 prices of overall origins in India - prior to the Taiwanese major’s announcement - stood at $1860-1950/ton CIF India, cash while Northeast Asian origins to China were offered at $1650-1700/ton CIF China, cash.

The producer’s offers to Asia lagged far behind the prevailing market levels for the past couple of months, as the producer had limited allocations and its announcements in September, October and November failed to catch up with the stronger rally in the rest of the spot market.

Now that the downturn has kicked off, this price gap is expected to narrow with the prevailing market level matching the Taiwanese major’s offers.

Other suppliers to follow suit

“Suppliers in China, South Korea and Japan can also now be expected to significantly reduce prices on the lines of the Taiwanese seller,” said the Indian trader.

A Japanese producer has already indicated offers to India at the low-$1900s/ton. Japanese imports into India are duty-free, which meant actual dutiable imports from elsewhere could be priced at $1725-1750/ton, traders said.

An Indonesian producer commented that demand in Southeast Asia remained firm. “We knew the Taiwanese major would cut prices because of the developments in China. We thought they would reduce it by $100/ton,” a source at the company’s marketing department said. “This is definitely not in line with expectations. The market is still tight and we are seeing low inventories with most customers, whether it be in Indonesia or elsewhere in Southeast Asia,” he added.

The December allocations were not available yet but traders said if the last few months were any indication, the next month could also see low allocations. The producer’s November allocation to India at about 15,000 tons was higher than October’s around 10,000 tons, but much lower than its typical allocations at above 20,000 tons.

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