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Tightness continues to dominate Asian PVC markets ahead of Oct pricing

by Pınar Polat - ppolat@chemorbis.com
  • 29/08/2019 (04:17)
PVC players in China, India and Southeast Asia have started to voice their expectations regarding a major Taiwanese producer’s October price announcement in the midst of the persistent tightness of supply.

The Taiwanese major had applied a $30/ton increase on its September PVC offers, a move that was followed by most suppliers across Asia. Buyers, particularly in India, agreed to pay the proposed hikes when concluding their September deals.

October outlook largely shaped by low supplies

Tightness has continued to be the dominant factor in determining the market direction with players’ initial expectations for October calling for rollovers or slight increases.

“Supplies are likely to remain limited over the near term as the upcoming shutdowns in Asia will add to the tightness. Demand is not bad since buyers are eager to secure cargoes in the face of low supply. We believe that PVC prices for October might see some further gains,” a source from a Japanese producer commented.

Taiwan’s Formosa Plastics Group (FPG) is planning to shut its PVC, VCM, and EDC units in Mailiao for maintenance starting on September 10.

Spot VCM prices surge

Data from ChemOrbis Price Wizard suggest that the weekly average of spot VCM prices on CFR China basis posted a sizeable gain of $60/ton when compared to last week as the market continued to find support from low supply levels.

End of the rainy season approaches

Another factor supporting players’ firm expectations for the upcoming month is the approaching end of the monsoon season in India and in some Southeast Asian countries.

“The return of demand in the key Indian market should encourage Asian PVC suppliers to maintain their firm stance in their October pricing,” a few players opined.

The other side of the coin

Depreciating currencies, escalating trade tensions and growing concerns over the global economy might also come to the front as important factors playing a role in setting the tone of the market in the upcoming term, several players commented.

An Indian trader said, “The devaluation of the rupee would limit the upside as it hampers buyers’ demand towards import purchases. Hence we might see rollovers or only slight hikes on fresh prices for October.”

A similar picture might be observed in China and in several Southeast Asian countries as depreciating local currencies keep buyers in a cautious mood when they decide on their new purchases. The Chinese yuan dropped sharply last week to its lowest level against the US dollar in 11 years as hopes for a breakthrough in the trade war began to dim.

In addition to that, trading activity in China is expected to slow in the weeks ahead as the country prepares for the National Day holidays. Called Golden Week, China’s National Day holidays start on October 1 and last for about a week during which time business activity tends to wind down.
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