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US supplies, weak demand to keep Asian PVC downhill into October

by Shibu Itty Kuttickal -
  • 28/09/2023 (09:13)
Supplies from the US and suppressed regional demand are expected to keep import PVC markets in Asia - which have so far seen a 3-8% fall since mid-August – on a downtrend in October. Apart from the US prices, the market sentiment has also been dealt a blow by the lackluster response to the latest offers to Asia from a Taiwanese major even after price cuts by $30-40/ton.

Import PVC K67 prices in the latest week are assessed at $790-850/ton CIF India, $790-845/ton CFR China and $790-830/ton CIF Southeast Asia, all on cash basis. Export carbide- and ethylene-based prices of the same PVC grade have also seen a 4-5% fall from levels noted in mid-August to respectively $750-790/ton and $760-800/ton, both FOB China, cash.


Markets not too enthused by the drop in Taiwanese benchmark offers

Most players were expecting October offers by a major Taiwanese producer to fall by up to $60/ton, but the benchmark levels were pared down by only $30/ton to $870/ton CIF India, and by $40/ton to $845/ton CIF China and $800/ton FOB Taiwan. No volume discount was also offered by the major.

Buyers in the region were not too happy with the Taiwanese October prices, with some, particularly in India expecting the major to cut prices further for the month.

The company’s allocations to India for October were around 25,000 tons, about 70% of which have not been subscribed to so far, according to latest reports. “The uptake has been too slow for the major. We did expect it to revise prices for its October allocations downwards by about $40/ton this week,” said a Mumbai-based trader. A Singapore-based trader said the major is likely to earlier-than-usual offers for November shipments with significant reductions, rather than revising downwards its October offers.

Supplies from US worsen ‘problem of plenty’

Most Asian players have reported adequate supplies keeping demand suppressed, especially as US shipments have started making their way to the Asian markets. The latest US shipments have meant further cuts in prices at the low ends. “We were already seeing lesser and lesser uptakes from converters as their sales of end-products haven’t been too good ahead of the year-end,” another Mumbai-based trader said. “Ample availabilities across Asia have exacerbated this problem of plenty. This has meant while offers have slid, bids have fallen even further,” he added.

In India, the world’s biggest PVC importer, import volumes haven’t sagged much, keeping availability easy for buyers. Total PVC import volumes for June fell below the 200,000-ton mark for the first time this year and July shipments are expected to stay around the same level. But the first half of the year has seen an almost 80% surge in PVC imports into India and not many buyers see an issue of availability.

Delay in expected post-monsoon demand surge

After deficit rainfall of about 10% from the average in the first three monsoon months beginning June, the Indian Meteorological Department, the country’s weather office, is predicting heavy rains in September. It also suggested that the monsoon was unlikely to start receding as it should by mid-September. This has possibly meant a further delay in the stockpiling for the post-monsoon season, although a good monsoon should typically improve rural crops, as well as purchasing power and spending prospects, lifting the demand outlook for the fourth quarter.

Although the Indian economy is gaining strength, led by domestic private consumption and fixed investment with strong public sector expenditure, the expected boom in infrastructure works that would have strengthened polymer markets hasn’t taken off yet. Market participants are banking on a surge in activity ahead of the parliament elections set for March-April 2024.

China slumps on weakening demand while US offers force SEA suppliers to cut prices

While China’s PVC prices both for locals and exports have seen a sharp fall this week, the same bearish trend has also pervaded Southeast Asia markets, where import prices fell below the $800/ton mark as a result of US offers. A Southeast Asian producer’s shipment was offered at $810/ton CIF late last week, but resistance from buyers forced it to reduce the price to $790/ton, at which level a deal was reported. “Prices may keep sliding. Demand is weak, and we think prices will drop further, so no stocking up for now," said a Vietnamese converter.

A regional producer said he is not posting any October prices for now. “We can negotiate and offer extra discounts. Our plants are running at 70-75% capacity. In fact, most PVC producers in Asia are operating at low run rates of 65-85%. As prices are too low, it is hard to run at full rate,” he added.
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