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US PVC import deal surfaces in India amid rising freights from NEA

by Shibu Itty Kuttickal -
  • 13/05/2024 (02:05)
The Indian markets have in the latest week seen June-loading PVC shipments from a US producer changing hands after a nearly 5-month gap, with the price noted around the mid-point of the current ChemOrbis Price assessment range for overall origins.

This news came in as traders in India and Southeast Asia noted a considerable rise in freight costs for transporting Northeast Asian PVC to India and SEA, leading to higher numbers being discussed at the low end of the current import price ranges. Traders in India confirmed reports from elsewhere about the deal for the US shipments totaling about 3,000 tons done at $775/ton CIF India. This is the first deal for a US shipment noted since December. In fact, there have been no US offers reported since the second week of January.

The current India import pricing range was noted at $750-800/ton CIF India, the midpoint of which is at a four-month low, shows the ChemOrbis Price Wizard. Prices rose from early January by slightly more than 7% in mid-March before falling by about 4% to the current levels. The ChemOrbis data show the latest level CIF Southeast Asia price was also close to the low prices noted about four months ago.

PVC K67 – India – Southeast Asia

More US shipments may change hands for India

Traders in India confirmed the deal which came to light in enquiries by ChemOrbis elsewhere in Asia. “We can confirm that a deal for June-loading shipments totaling about 3,000 tons from the US Gulf to India changed hands at $775/ton CIF India. Another 1000 tons or slightly more of the same origin could still be sold in the next few days, for which discussions were ongoing. The current pricing may have opened an arbitrage window for US PVC to India,” a Mumbai-based trader said. The current CIF India pricing for the US origins meant the expectation was for FAS prices to fall in June. Currently, ex-Houston FAS prices are hovering around $720/ton.

US new capacities are expected to ease the availability of import cargoes for Asian buyers. The FPC’s 136,000 tons/year PVC plant in Baton Rouge is starting operations in the current month, while Shintech’s 200,000 tons/year plant in Plaquemine is expected to start up in July. At the same time, PVC demand in the US could pick up ahead of the hurricane season starting in June.

Freight rates add to import costs

At the same time, energy and feedstock prices have risen over the last few months, raising production costs as well as freight rates, especially for sellers of Chinese, South Korean, and Japanese PVC to India and Southeast Asia. For instance, the current freight rate from China to India was noted at about $65/ton, higher by about 45% of the freight rate in early April.

“This has certainly led to some upward pressure at the low end of the pricing range for PVC K67, which has mostly seen Chinese origins in recent months,” another trader said.

However, demand in the Chinese market has stayed sluggish, resulting in a worsening of an already slack supply situation, hit prices in China. Players in China don’t expect the supply slack to be rectified soon. “There are basic requirements because of normal overall fundamentals but the demand is still weak. The month of May normally falls in a peak season, so demand is normal, but we don’t see any interest in accumulating stocks,” said a converter in China.

Will Thai plant explosion hit PVC availability?

Meanwhile, traders say the maintenance season in Asia and the Middle East may crimp availability to both India and Southeast Asia. Players were also keenly awaiting more details of an explosion at SCG’s Map Ta Phut Terminal in Thailand to know the extent of its impact on PVC production, which would have a bearing on PVC prices in Southeast Asia as well as in India.

SCG’s Rayong Olefins (ROC) cracker and Map Ta Phut Olefins (MOC) cracker feed many downstream plants including Thai Plastics and Chemicals, which focuses mainly on PVC production. AGC Vinythai is also located in Map Ta Phut. Although these two producers are yet to comment about their production status following the force majeure in their feedstock supplies, disruptions are deemed highly likely. However, prices in Southeast Asia were stable in the current week. In Vietnam, a major PVC buyer, said that demand was weak because of the sluggish real estate sector. “In the current unstable political situation, many projects are on hold and buying is on hold. We don’t think demand can improve this year. But with tighter supply in the turnaround season, we hope prices can rise,” a Vietnamese trader said.
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