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Suppliers hold firm on brighter demand prospect, upstream market remains bearish

Week 51, dated 18 – 22 December 2017

In Asia, the regional PVC market remains relatively firm this week after major Taiwanese maker smoothly sold out allocated quantity to India with increases in the previous week. Demand prospect in January appears to be bullish at the moment in spite of the fact that upstream EDC and VCM markets are facing tremendous inventories pressure.

In India, a major producer introduced additional price increment on PVC cargoes to local buyers, just less than two weeks after the first hike was implemented. Latest offers stand at IDN1000/ton ($16/ton) higher thanks to improved demand condition in the country. Market remains active after the hike and players are putting heavy bet on bullish outlook in the coming month. “Market is entering the traditional high demand season and we are optimistic that demand would continue to recover. The holidays seasons have brought some surprisingly pleasant developments,” a trader said.

Other international producers are keeping import offers to the country at a premium of $10-20/ton over major Taiwanese producer’s prices. “This is very understandable as India might need to source approximate 120,000 tons of PVC from import market this month,” a source said.

Demand condition in Southeast Asia in general, is not up to seller’s expectation. Even with satisfactory end product orders, many Vietnamese pipe makers are resisting the recent price hike strongly. An international trader opens offers for few hundred tons of Chinese carbide based PVC to Vietnam with $20/ton increased to $850/ton CIF, LC AS term said, “Our customers drop interest almost immediately. Buying attention is now putting on ethylene based PVC from other origin.”

As reported in the previous week, Chinese producers are not having comfortable allocation for export market this month with prices standing in the range $840-850/ton FOB China, LC AS term. This does not excite converters in Malaysia either and buyers here continue sourcing materials from Southeast Asian maker at more competitive levels.

In China, there have not been any major changes in term of trading activities. Lack of inventories pressure encourage suppliers to implement CNY50-100/ton ($8-15/ton) hike on both ethylene and carbide based cargoes, defying the weakened futures contract. Many producers have sold out allocation for January, indicating a high possibility of continued firming prices in the near term.

In related Production Status news, Thailand’s Thai Plastics and Chemicals Public Company Limited (TPC) resumed production at one of the PVC lines after a brief shutdown earlier last week. The shutdown is not expected to generate major impact on the general supply condition, however specific grade might face tightness, especially at the current improving regional demand condition.

A summary of import PVC prices to the region is shown in the following table: