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Will Asian PVC markets move up to match Taiwanese Sept PVC pricing?

by Shibu Itty Kuttickal -
by Esra Ersöz -
  • 10/08/2022 (11:24)
A major Taiwanese producer rolled over its August prices into September for Asian destinations. Although players have widely questioned the bottom across the region lately, they are taking the producer’s September prices with a pinch of salt given the prevailing market level, comfortable supplies and underlying demand concerns.

The producer’s PVC K67-68 offers for September are at $1090/ton CIF India and $930/ton CIF China. Considering that US PVC was offered to India below the $1000/ton mark, the September pricing of the producer stands well above the prevailing market level. Thus, the following questions are being mooted:

Taiwanese offers stabilise after four months of cuts

The Taiwanese producer has resorted to stability in the latest instance, after reducing prices for four months in a row.

For August, the producer reduced prices by $230/ton for India and $190/ton for China, while FOB Taiwan offers came in lower by $200/ton. It had reduced prices by $90/ton for July, $130-150/ton for June and by $50-80/ton for May.

Chinese producers already pioneered PVC rebound in late July

Import prices in India, China and Southeast Asia began a decline that started in April, as buyers stayed away from the markets fearing further declines.

But, after falling by 35-40%, the Asian markets have either stabilised or moved up slightly since early this month, with Chinese producers raising offers both to export and local markets , although buying activity has remained muffed across the region.

US shipments set to move higher after being offered with 3-digits

Other traders in the Indian market pointed out to US shipments that were offered at slightly below $1000/ton early in the week “Early in the week, we offered a shipment from a US Gulf producer at slightly below $1000/ton but there were no takers. We’d sold a shipment only a couple of weeks earlier at around $970/ton,” an Indian trader added.

But he added that he was withdrawing his offers after the Taiwanese major’s latest offers. “We could return with offers in the low-to mid-$1000s/ton,” he added.

Buyers covered with low-priced cargoes,Taiwanese offers deemed ‘unworkable’ in India

“We don’t see such a price working in the Indian market as large volumes of low-priced shipments booked earlier are expected to land in India in the next few weeks,” said an Indian trader.

Import K67-68 prices into India stayed mostly below the current Taiwanese pricing since the second week of July, with prices of carbide-based shipments slumping below the $1000/ton CIF India threshold. And, in the last week of July, ChemOrbis Price Index data showed the weekly averages of import K67 prices on CIF India/SEA basis hitting their lowest levels since August 2020.

A local producer in India has been keeping its offer steady in India in the past few weeks, but traders said demand continues to be weak although the post-monsoon demand should have set in around now. “We think players have enough stocks in hand and there are substantial import shipments booked at lower prices coming in. So it might take some time for the post-monsoon demand to be reflected in the prices,” another Indian trader added.

Demand stays dull in China, Southeast Asia

In Southeast Asian markets, demand remained lacklustre. “Players in Vietnam are hesitant to buy shipments at prices above the low-$900s/ton. Sellers may have to offer good discounts to close deals. Buyers don’t want to keep high inventories and still worry prices can drop any time,” said a Vietnamese converter. Another converter, also Vietnamese, added that sellers tried to raise prices to $920/ton, but had to lower it to $890/ton on buyer resistance.

A Philippine converter said the PVC markets remained oversupplied. “Supplies are ample in markets across China, Southeast Asia and India. Exacerbating the bearish demand is the depreciating Asian currencies against the US dollar,” he added.

Resistance to the new Taiwanese pricing is expected from Chinese buyers also. “PVC futures prices have moved higher but demand remains thin. We hear of deals done rarely these days. Factories across the Zhejiang province have been subjected to energy curbs amid a heat wave and higher coal prices, and this has hit demand,” a PVC trader in China said. Such a situation could make it difficult for agents of the Taiwanese producer to sell at the current prices.

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