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US origin hammers import PVC prices into Asia

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
  • 10/11/2022 (02:31)
Surpluses available for exports from the US Gulf are hammering import prices in the Asian markets ahead of a major Taiwanese producer’s pending notifications of its benchmark December offers. The year-end destocking of US PVC has been evident since mid-October across the board , although it appears to have picked up steam recently.

Prices in India, China and Southeast Asia are already at the lowest levels for about two and a half years, and market players expect no respite from the bearish clutch on the PVC markets ahead of the year end. ChemOrbis Price Wizard shows PVC indices for all three regions trading at the lowest since June 2020.

FAS Houston November offers plunge

In the previous week, traders said a major US producer, which has continuously been reducing its FAS offers for three months, cut its export prices for November to the mid-$600s/ton, from the previous month’s low-to-mid-$700s/ton. But the latest week has seen two other US producers cutting offers to as low at $600-610/ton FAS Houston.

“The reason for the low-$700s/ton offers into India is not too hard to understand. When we have exports from the US Gulf at such low FAS prices, we shouldn’t be surprised to see import levels at such low levels. We are also likely to see more US origins calling at Chinese and Southeast Asian destinations soon,” said an Indian official of a major US trading house.

US offers into China sharply down

As for the Chinese market, offers of US origins fell sharply, with a deal reported at $650/ton for a US-origin cargo, $110/ton lower than the low-end of the previous week’s assessment of $760-780/ton CIF. A similar deal was reported in the previous week also, but it had not been confirmed.

Traders said a few US producers could be faced with an oversupply situation as they near the year-end. “There’s immense pressure to pare down inventories ahead of the year end and hence the steep fall in FAS prices. We expect prices to fall further ahead,” a trader said.

Offers into India keep falling

In India, the overall range for import PVC K67 prices was assessed $30-50/ton lower from two weeks ago at $700-780/ton CIF for the current week, with the low end continuing to be pressured by US offers. Traders confirmed offers of US origin at as low as $700/ton.

Represented at the low-end in the previous week was a deal for a US-origin shipment at $750/ton CIF India. Another deal at the same level for a US origin cargo has been reported in the current week also. But US offers have plunged by another $50/ton from the previous week.

Traders said offers reported above the $800/ton mark was unlikely to be accepted by the market. “Most buyers in the Indian market are looking for shipments at $700-720/ton levels. In the current situation, we don’t see higher offers gaining traction,” an Indian trader said. “An Indonesian offer at $780/ton CIF for K57 points to even lower offers for higher K-value material,” he added.

CIF SE Asia levels may slide below the $700 threshold

In the latest week, the overall range of import PVC K67 prices were assessed $10/ton lower from last week at $690-760/ton CIF, cash.

“We didn’t receive any PVC offers this week, but market prices are being heard at as low as $670-690/ton CIF Vietnam for the US, Japan and Indonesia. But despite prices falling, no one wants to buy,” a trader said. Traders said it was not inconceivable that import prices in Southeast Asia fell below the $700/ton CIF mark, given the current FAS Houston levels.

‘No surprise’ - Taiwanese major may slash offers

As the US prices continue to pressure import levels, regional traders expect a major Taiwanese producer to extend its series of monthly price cuts to an eighth month when it notifies its December offers to the Asian markets.

“Frankly, we don’t want to predict what could be offers as of now. But if we look at the aggressive way buyers are bidding and the way US offers are falling, we should see the benchmark levels falling by at least $100/ton. In fact, agents of the Taiwanese major are reportedly seeking a reduction of more than $100/ton,” a trader said. The Taiwanese producer is expected to issue its December offers next week.

PVC – Import – China – India
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