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Weaker domestic demand prompts Vietnam to export polymers

by Abdul Hadhi -
  • 08/09/2020 (09:35)
Competitively-priced Vietnamese origin GPPS and PVC materials are being seen in overseas markets as demand weakens at home. Some Vietnamese sellers, meanwhile, are re-exporting PE cargoes mainly to China where demand is strong and prices are higher, according to players.

The country is currently experiencing the rainy season when demand is traditionally slow. Adding to the market weakness has been fears that a second wave of COVID-19 infections and renewed lockdowns may affect the slow economic recovery.

A spike in fresh cases recently led to a renewed lockdown in Danang - a major city in central Vietnam. The country lifted its initial lockdown in late April and business activity picked up earlier than in the rest of Southeast Asia but the momentum appears to have slowed lately.

GPPS offered into China

Vietnamese origin GPPS has been offered as low as $930-940/ton CIF to China even as Northeast Asian producers hiked offers amid tight supply. The attractive offers for Vietnamese material may moderate the upside for prices if they become more widespread, according to market players.

Import prices of GPPS injection - mainly used in food packaging and disposable cutlery - in China are currently above $1000/ton CIF and have been rising from late July, according to ChemOrbis Price Index data.

Highlighting the poor demand in Southeast Asia, a Northeast Asian producer said, “Southeast Asian demand has been weak following the rather tepid regional economic recovery post COVID-19 lockdowns. The higher prices into Southeast Asia are indicative of the strong price uptrend for PS but negligible business has been transacted.”

Meanwhile, “China demand has exploded amid a dearth of supply as well as by the strong post COVID economic recovery amid strong government fiscal stimulus,” he added.

China’s exports increased a better than expected 9.5% on-year in August - the third straight month of higher exports as the country’s trade improves due to more countries easing their COVID-19 restrictions.

PVC offered into India

Similarly for PVC, Vietnam-based producers have started to export to India where demand and prices are better.

A source at one such producer explained, “As demand in Vietnam and Southeast Asia is very weak, we are exporting some material to India. Normally, we won’t have extra cargoes to export but we are doing now because of poor demand in the local market especially after the second wave of COVID. We export because of better demand and prices in India.”

Another local producer added, “So far, demand has been quite weak. Maybe after the rainy season is finished, demand will be better.” Demand for PVC pipes from the key agriculture sector tends to be weak during the rainy season.

Vietnam-origin PVC has been offered into India at around $960-980/ton in recent weeks, at the lower end of the range of $960-1000/ton CIF India. PVC demand and price recovery in India is expected to improve further as the country comes out of the monsoon season.
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