Taiwanese major sells out Nov PVC quota to India ahead of Diwali
“Indian buyers traditionally stock up ahead of the lengthy Diwali holidays and Taiwanese major’s lower November offers have added further incentive,” players noted.
Nov allocation sold-out shortly after the announcement
Market players said that the Taiwanese major sold out their allocated quantity of PVC for the Indian market shortly after the announcement on Tuesday. The quantity was allocated to its agents in the country but agents also believe that they will be sold out soon due to the limited allocation.
The Taiwanese major cut its new prices by $30/ton to all markets when compared to October, with a $10/ton discount obtainable for purchases at/above 500 tons. For October, the producer had rolled over offers from September toIndia but applied a $20/ton decrease on offers to China and other markets.
Import prices of PVC have been stable so far in October in India, as opposed to China, where prices retreated despite some expectations of stock replenishment after the week-long national holidays from October 1.
Ahead of the move by the Taiwanese producer, a major domestic producer in India cut its local PVC K67-68 offers by INR3000/ton ($42/ton) as of October 10.
Demand traditionally increases ahead of Diwali holidays
The lower offers were unexpected in India where market players had earlier expected a rollover of prices. While the market is likely to follow the Taiwanese major’s lead, prices may gain strength going further into the fourth quarter.
Traditionally, PVC demand tends to pick up in India, along with other products, as the market replenishes inventory after the lengthy monsoon season. Stocking up ahead of the Diwali holidays usually adds another boost.
The major festival stretches over five days in most Indian states starting from October 26.
What happened back in 2018 and 2017?
According to ChemOrbis Price Index, import PVC prices on CIF India basis last year started gaining ground from mid-October 2018 with the uptrend continuing until February 2019, during which time they rose 8%. The year before in 2017, the gains started in November and persisted until March 2018.
Diwali dates vary between mid-October to mid-November while the monsoon season can also stretch beyond September in some years, and the timing of both can play a significant role in determining when demand starts to increase in India.
However, demand usually tends to remain robust with the first quarter being the strongest. Most businesses in India have an end-March fiscal year-end and markets tend to be busy to ensure a strong finish before they close their books for the year.
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