Will supply woes prompt further PVC price hikes in Asia?

Import PVC prices in India, China and Southeast Asia chased a stable trend during the last days of May as trading activity was limited. Players retreated to the sidelines after wrapping up their business for June with $10-30/ton hikes from May while initial expectations for July started to be voiced.

Despite the fact that monsoon rains approach India and growing trade tensions weigh on buying sentiment in China and Southeast Asia, several buyers and sellers are holding firm expectations regarding the near term and discussing the possibility of seeing further hikes in July offers.

Braskem shutdown rattles markets

Players in Asia mostly talked about the recent production disruptions in Brazil this week, believing that Braskem’s plant shutdowns and force majeure might affect the PVC markets on a global scale in the upcoming term.

According to market sources, Braskem shut its chlor-alkali and EDC plants after ceasing salt mining operations due to geological damage in the region.

A source from a Japanese PVC producer opined, “We think that Braskem’s force majeure will help PVC maintain its firmness as some allocations might be diverted from Asia to Brazil. We expect to see further increases of $20-30/ton in prices for July.”

PVC shipments to face delays from SCG Thailand

On top of that, an explosion and fire erupted in a ship carrying chemical containers in Thailand’s Laem Chabang seaport on May 25. According to sources with knowledge of the situation, all PVC shipments from SCG Thailand might be delayed because of congestion.

China is already tight

Besides these two unexpected supply disruptions, China’s PVC market has already been tight for a couple of months owing to planned/unplanned shutdowns amidst the government’s stricter safety measures after fatal blasts at several chemical plants.

“Rising trade tensions have hurt China’s PVC demand, yet this has been mostly counterbalanced by the ongoing tightness. Prices might see a fresh round of modest hikes for July. However, we do not exclude the possibility of stable PVC prices as the recent downturn of crude oil futures has raised concerns,” a Chinese trader commented.

Planned shutdowns in South Korea, Indonesia

Two South Korean producers are planning to shut their PVC plants for maintenance in June, which has also supported players’ firm expectations for the near term.

A trader in India said, “LG Chem will shut its plant in June; hence their export allocation will be limited. Plus, demand is still firm as buyers are willing to build some stocks before the long monsoon season starts in India.”

Meanwhile, Indonesia’s Standard Toyo Polymer (STATOMER) is also planning a maintenance shutdown at its PVC unit in June.