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Will shutdowns counterbalance slowing PVC demand across Asia?

  • 17/05/2017 (09:50)
PVC supplies particularly in China have started to diminish as several ethylene and acetylene based PVC plants are either undergoing maintenance or readying for shutdowns in the May-June period. Domestic producers in India are also planning turnarounds in the same timeframe. This has coincided with the expectations of slower demand across the region due to the approaching monsoon season and the month of Ramadan. Players are now questioning as to whether these factors will counterbalance each other or one of them will gain prominence to set the tone of the market in the near term.

In China, acetylene based PVC prices have already responded to the maintenance season, which is particularly taking place at acetylene based PVC plants, and posted slight increases this week. PVC futures on the Dalian Commodity Exchange registered a weekly increase of around $22/ton as of May 16, which also supported the recovery in local prices. Meanwhile, ethylene based PVC prices remained mostly stable so far this week.

A trader said, “Acetylene based PVC prices increased when compared to last week as maintenance shutdowns helped reduce high inventory levels to some extent in China.”

A source from an acetylene based PVC producer opined, “We have increased our export offers by $10/ton based on higher futures. Plus, supplies in China have been diminishing due to the maintenance season although demand is not so strong.”

In India, demand is considered weak particularly ahead of the imminent start of the monsoon season. Offering to India, a Chinese acetylene based PVC producer commented, “Our sales have been very weak following the Taiwanese major’s decision to reduce its offers to India by $80/ton for May. Buyers in India prefer to stay on the sidelines or source ethylene based PVC cargoes. However, acetylene based PVC prices in China increased this week due to the maintenance season and higher futures. Therefore, we think the Taiwanese major will not lower its prices for another month and keep its offers stable for June.”

A trader based in India also opined, “Demand in India is not good so far in May and now we are entering the low season in line with the approaching monsoon. The market is quiet this week as players are waiting for the Taiwanese major’s June announcement, which we think will come with a rollover as there are also shutdowns at local producers.”

Another trader, however, expects the Taiwanese major to decrease its offers for June. “Although demand remains slow in India, the Taiwanese producer’s new offers can still be found attractive as Indian producers will have maintenance shutdowns in late May and June.”

A few more traders also do not think that upcoming maintenances in India will support prices in the near term, expecting the Taiwanese major to lower its offers for June due to weak demand.

You can visit ChemOrbis PVC Production News in order to track capacity changes around the world at a glance and keep on top of new capacity additions.

Expectations remain widely weak in Southeast Asia, too, as few players think that shutdowns will counterbalance slower demand. In Vietnam, a source from a local producer said, “The peak season is about to end in Vietnam and the monsoon is approaching. We think it will take 2 or 3 months for the market to recover.”

In Indonesia, a trader reported that trading activities have slowed down ahead of the month of Ramadan and accordingly, prices are falling.
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