Taiwanese major’s June PVC pricing expected to reverse course after two months
A possible firm pricing for June means a rebound for PVC prices on CIF India/China basis as both markets closed the week that ended on May 8 at more-than- a-decade low, according to the weekly average data obtained from ChemOrbis Price Index.
Signs of price recovery in India after lockdown relaxation
On May 4, the Indian government decided to extend the nationwide lockdown by two more weeks
until May 17 but to allow some businesses including manufacturing, industry and agricultural sectors to resume.
After the major Taiwanese producer skipped its PVC offers to India for May due to strict quarantine measures, the government’s step has generated some positivity in the market for June.
Despite last week’s aggressive offers for multiple origins, there was even market talk of a price bottom. PVC players are also willing to make use of the window between the end of the lockdown and the arrival of the monsoon in June.
A trader opined, “Healthy demand from China, the gradual resumption in India’s manufacturing as well as the recent gains in the Asian spot ethylene market have lent support to the Indian PVC market.”
However, some players are still cautious as they question the sustainability of any possible firming after June offers. Holding fears of a second wave of strict lockdown, they underline that PVC supply is ample in the country with congestion at ports, there is shortage of trucks/drivers and customs are busy.
Strong PVC demand from China, the largest consumer for now
Although the major Taiwanese producer’s May PVC offers to China indicated a drastic monthly drop of $160/ton, the local PVC market gave a limited response and even rebounded soon after.
Local PVC prices in China have been firming up for the past three weeks thanks to buoyant demand amid increased activity in the infrastructure and construction sectors.
After the country’s emergence from the COVID-19 linked lockdown, China has become the current largest PVC consumer and took sellers’ attention.
Asian ethylene market preserves firming
As of early May, spot ethylene prices on CFR Northeast Asia basis rebounded from their lowest levels since ChemOrbis started compiling data in 2007 and increased 21% since then. Bullish buying sentiment was cited as the main reason behind this firming.
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