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Vietnam domestic PVC market bucks broader regional mood

by Abdul Hadhi -
  • 27/01/2021 (03:39)
Sentiment in PVC markets in Southeast Asian countries and China is softening heading towards Chinese New Year but Vietnam has been an exception.

Domestic PVC prices in Vietnam rose $13/ton to $1370/ton (excluding VAT) on FD basis over the week while prices of imported material decreased $15/ton to $1230/ton CIF SEA, according to the weekly average data from ChemOrbis Price Index. Domestic prices are up 9% since they started rising from mid-December 2020 while import prices are down 3%.

PVC prices - Vietnam - Southeast Asia

The gains in the domestic market is largely supply-driven.

A local converter said, “Supply is quite tight now. It isn’t easy to buy and volumes are very limited. Demand before Chinese New Year is still alright. As it is just limited material and high prices, converters try to run their plants at a minimum rate.”

Local producer raises Feb offers

Citing the ongoing tightness in prompt supplies, a local producer hiked February PVC offers to the domestic market by VND1,300,000-1,400,000/ton ($56-61/ton) from January to VND30,900,000/ton-31,600,000/ton ($1342-1373/ton without VAT) on ex-warehouse, cash basis.

A source from the producer explained, “Regarding our February hike, we haven’t received strong feedback from buyers so far since they are not willing to build high stocks ahead of the Chinese New Year holidays. They also believe that the current price levels for PVC are quite high.”

“However, tightness in prompt supplies continues since imports have been hindered by the shortage of vessels. We believe that supply will prevent PVC prices from shifting direction at least for the near term,” he added.

A scarcity of deep sea cargoes has prevailed despite the plants returning to production after lifting earlier force majeures amid the hurricane season in the US Gulf. Some market players have even suggested the tightness in supply may persist until the end of the first quarter amid a shortage of containers.

Chinese New Year holidays to reduce activity

However, the market mood is likely to be subdued during the actual Chinese New Year holidays which start on February 10 in Vietnam. Like China, the holidays in Vietnam called “Tet” runs for a week and business activity tends to be very much muted. It may take some time for market activity to return to pre-holiday levels, which prompted a local end-product maker to comment, “We hope prices will go down after Chinese New Year.”
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