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Tight supplies keep Asian PVC markets bullish

by Shibu Itty Kuttickal -
  • 25/01/2023 (02:50)
Asian PVC markets were holding on to previous levels during the week as most markets in the region were celebrating the Lunar New Year holidays but the sentiment stayed markedly bullish, as supplies were tight. There are expectations of availability being squeezed further as China reopens, with Beijing having lifted most of the COVID restrictions, raising demand within the local market.

Most traders said Chinese sellers could be expected to raise prices as it reopens after the holidays. “An expected demand surge in China after the holidays is welcome news for the PVC markets in Asia. This would certainly mean less availability for the Asian import markets,” said a PVC trader in India.

Offers from China may rise after holidays

“We’ve tried hard to secure Chinese shipments for imports into India before they went on holidays, but the Chinese sellers did not seem too keen to sell. We were looking to buy at $940-950//ton CIF India. We expect the Chinese offers to rise after the holidays,” he added.

In India too, the sentiment is currently seen stronger ahead of the national budget to be presented to the parliament on 1 February. Infrastructure and rural development will be key areas of focus in the upcoming budget, and will boost products like polymer pipes, including PVC.

Most sellers wait for China to reopen

Another Indian trader said other sellers to India seem to be waiting for China to reopen before deciding on their offers. “We haven’t seen Japanese and South Korean offers into India in the last two or three weeks. We may see offers from these origins only after the end of the holidays.

“Sellers possibly believe that price will rise as China reopens. Supplies in India are also tight despite the fact that the markets are entering the year-end, when there’s typically a paring down of inventories. But inventories in India are already low and this would mean that the financial year-ending may not have much of an impact,” he added.

US shipments stay away from Asian markets

US offers to Asia have also dried up since a cold wave that disrupted plant operations, especially in the manufacturing hubs in the US Gulf. US sellers apparently have no availability for February. At the same time, traders also said netbacks to Asian destinations are considered currently not too attractive for US sellers. “They’d rather sell to the European markets in case of export availability,” the trader said.

PVC – Import – Asia

Fast turnaround in Asian import prices

ChemOrbis Price Wizard shows Asian PVC import markets, which have been on a seven-month-long bearish phase till November, 2022, have since seen a fairly fast turnaround. Indian import prices have jumped by about 32%, while Southeast Asian prices have risen by about 24% and Chinese prices by about 29% since then.

In the week ended 21 January, India import prices were noted in a $930-970/ton CIF range, having remained stable for the second week in a row. Southeast Asian prices were also stable for the second consecutive week at $850-890/ton CIF, cash. In China, prices stayed on an upward trajectory for the third week in succession and were in a $860-940/ton CIF range for the week ended 21 January.

China property sector boost to PVC

Positive expectations on the property sector in China have improved the sentiment in the PVC markets. Firmer futures prices in the Dalian market have also underpinned prices in China apart from a discernible tightness in ethylene-based PVC. Chinese PVC players mostly hold bullish expectations, with strong expectations of a demand revival.

In Southeast Asia too, although the upcoming Lunar New Year holidays kept buyers away, sellers were claiming sold out positions for February.

Chinese sellers have reportedly tried to raise prices to Southeast Asia but the holidays have kept buyers away. However, Southeast Asian sellers reported sold out positions for February. Among them was an Indonesian producer, a source at which said, “We have almost sold out our February shipments and if regional markets are hesitant in accepting our prices, we have the option to export to markets that can offer better netbacks”. The squeeze in Chinese supplies may also have an impact on Southeast Asian prices.
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