Taiwanese major’s July offers underscore bearishness in Asian PVC markets
by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
PVC prices in Asia tumbled after a major Taiwanese producer notified Asian buyers of a $90/ton across-the-board reduction in its July offers early on Tuesday. Following the announcement, markets hit their lowest since November 2020.
The producer’s new PVC K67-68 offers are at $1320/ton CIF India and $1120/ton CIF China, while FOB Taiwan offers are at $1080/ton.
This has been the third price reduction in a row while the total price cuts by the Taiwanese producer since May has reached $270-320/ton. The producer had reduced prices by $130-150/ton for June, a month after it cut prices by $50-80/ton for May.
The predictions late last week were for a cut of about $50/ton or slightly lesser, if not a rollover. Indian traders said a deeper discount could have been to try and stem the flow of low-priced PVC offers into India from China.
Markets hit new one-and-a-half year lows
As tracked by ChemOrbis PriceWizard, the latest price cuts have resulted in Asian import markets — of China, India and Southeast Asia — trading at the lowest levels since November 2020, or new one-and-a-half year lows.
A better sentiment in the first week of June - as a result of the easing of lockdowns in Chinese industrial cities early in the month - had led to price increases but this happened to be short-lived as bearishness returned with new COVID clusters reported in Beijing and Shanghai.
Stock situation in India ‘quite comfortable’
“We were expecting only a slight reduction or a rollover in the Taiwanese producer’s July prices from June. But the developments in China, especially the rise in COVID infections, made us believe a larger discount to July is possible, but not as much as $90/ton,” said an Indian trader.
“We believe the current stock situation in India is quite comfortable. The latest Taiwanese pricing could create a problem for players who are sitting on a pile of high-priced shipments booked in the previous months. There will certainly be some buying, but not a lot,” the trader added.
Chinese carbide-based PVC exports keep pressure on India
Another trader pointed to the continuing flow of acetylene-based PVC shipments from China.
“Shortly after the Taiwanese producer’s notifications, we received an offer for an eastern China origin shipment of acetylene-based PVC at $1230/ton CFR Chennai, South India. The seller is seeking an advance payment of 20% in advance within two days and the balance one week ahead of arrival. Despite these conditions, we’re sure there are takers for this offer as the price is quite competitive,” the trader said.
In fact, competitive offers have resulted in nearly 50% of the PVC shipments into India being acetylene-based. “This has also resulted in the delta between ethylene- and acetylene-based import cargoes sliding below $50/ton,” the trader added.
Meanwhile, a source at a Chinese producer reported increasing supplies. “Supplies are increasing as there are less turnarounds in the second half of June. In addition, more plants are returning from turnarounds. Cost support has also weakened as coal prices have dropped. Even though there is improvement following some ease of lockdowns, demand is still below our expectations,” he added.
Other sellers follow the major
A Japanese producer also announced offers to the Asian markets shortly after the Taiwanese major showed its cards. “We have followed the major’s offers at $1120/ton CFR China,” a source at the producer said. “Our selling ideas to India are in a $1370-1400/ton CFR range,” he added. As Japanese shipments do not attract a 7.5% customs duty, the pricing would be equivalent to $1270-1300/ton for dutiable PVC from elsewhere.
Another smaller Taiwanese company also kept its offers to buyers in India and other Asian destinations at the same levels as the major. Traders reported receiving an offer from the producer at $1320/ton CFR India.
Southeast Asian players also reported ample availability of PVC. “As new China lockdowns start, we have rains in Vietnam. As China started opening up, people expected prices to rise and hurried to replenish material. The result is that everyone has ample stocks and doesn’t want to buy more,” a trader in Vietnam said.
The producer’s new PVC K67-68 offers are at $1320/ton CIF India and $1120/ton CIF China, while FOB Taiwan offers are at $1080/ton.
This has been the third price reduction in a row while the total price cuts by the Taiwanese producer since May has reached $270-320/ton. The producer had reduced prices by $130-150/ton for June, a month after it cut prices by $50-80/ton for May.
The predictions late last week were for a cut of about $50/ton or slightly lesser, if not a rollover. Indian traders said a deeper discount could have been to try and stem the flow of low-priced PVC offers into India from China.
Markets hit new one-and-a-half year lows
As tracked by ChemOrbis PriceWizard, the latest price cuts have resulted in Asian import markets — of China, India and Southeast Asia — trading at the lowest levels since November 2020, or new one-and-a-half year lows.
A better sentiment in the first week of June - as a result of the easing of lockdowns in Chinese industrial cities early in the month - had led to price increases but this happened to be short-lived as bearishness returned with new COVID clusters reported in Beijing and Shanghai.
Stock situation in India ‘quite comfortable’
“We were expecting only a slight reduction or a rollover in the Taiwanese producer’s July prices from June. But the developments in China, especially the rise in COVID infections, made us believe a larger discount to July is possible, but not as much as $90/ton,” said an Indian trader.
“We believe the current stock situation in India is quite comfortable. The latest Taiwanese pricing could create a problem for players who are sitting on a pile of high-priced shipments booked in the previous months. There will certainly be some buying, but not a lot,” the trader added.
Chinese carbide-based PVC exports keep pressure on India
Another trader pointed to the continuing flow of acetylene-based PVC shipments from China.
“Shortly after the Taiwanese producer’s notifications, we received an offer for an eastern China origin shipment of acetylene-based PVC at $1230/ton CFR Chennai, South India. The seller is seeking an advance payment of 20% in advance within two days and the balance one week ahead of arrival. Despite these conditions, we’re sure there are takers for this offer as the price is quite competitive,” the trader said.
In fact, competitive offers have resulted in nearly 50% of the PVC shipments into India being acetylene-based. “This has also resulted in the delta between ethylene- and acetylene-based import cargoes sliding below $50/ton,” the trader added.
Meanwhile, a source at a Chinese producer reported increasing supplies. “Supplies are increasing as there are less turnarounds in the second half of June. In addition, more plants are returning from turnarounds. Cost support has also weakened as coal prices have dropped. Even though there is improvement following some ease of lockdowns, demand is still below our expectations,” he added.
Other sellers follow the major
A Japanese producer also announced offers to the Asian markets shortly after the Taiwanese major showed its cards. “We have followed the major’s offers at $1120/ton CFR China,” a source at the producer said. “Our selling ideas to India are in a $1370-1400/ton CFR range,” he added. As Japanese shipments do not attract a 7.5% customs duty, the pricing would be equivalent to $1270-1300/ton for dutiable PVC from elsewhere.
Another smaller Taiwanese company also kept its offers to buyers in India and other Asian destinations at the same levels as the major. Traders reported receiving an offer from the producer at $1320/ton CFR India.
Southeast Asian players also reported ample availability of PVC. “As new China lockdowns start, we have rains in Vietnam. As China started opening up, people expected prices to rise and hurried to replenish material. The result is that everyone has ample stocks and doesn’t want to buy more,” a trader in Vietnam said.
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