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Market awaits February shipment offers. Initial expectation calls for minor increment

Week 2, dated 07 - 11 January 2019

The Asian PVC market is rather quiet this week as businesses for January are mostly concluded and players are waiting for major overseas suppliers to announce February shipment offers. Judging from the state of the upstream market and the demand prospect in India, Asian buyers are looking at $10-20/ton hike from the previous month; however, the availability of competitive Chinese cargoes might scale down some of the potential increases.

Demand in India is expected to continue to recover from the monsoon season, which might spearhead the firming trend for the regional PVC market. “Due to the upcoming Lunar New Year, the major Taiwanese producer might reduce allocation slightly. Depending on the extent of price increment, we think market shall not react too negatively here,” a market source commented.

In the meantime, major local producer in India has not opened new offers for PVC to domestic buyers and players expect the new price list to follow the development in the import ground.

Meanwhile, demand in China is not very great at the moment and carbide based PVC suppliers here seem to be pushing for export before taking off for the Lunar New Year. As informed earlier, there have been reports that the Chinese government is encouraging local PVC producers to increase the export quantity. Rumour has it that an export target has been given of approximately 100,000 tons, however, the information has not been verified at the time this report is published. 

Spot offers for carbide based PVC in local China market fell CNY50/ton ($7/ton) from last week to CNY6500-6600/ton ($829-842/ton without VAT) while ethylene based plunged CNY100-250/ton ($15-37/ton) to CNY6950-7200/ton ($886-918/ton without VAT), all based on EXW China, cash equivalent.

“Sentiment is sluggish but we do hope to see some pre-holiday replenishment activities once the new offers emerge,” a trader commented.

In Southeast Asia, Malaysian buyers reportedly received Chinese carbide based PVC offers at $850/ton CIF, LC AS – a rather competitive level. However, limited deals are materialised now that customers here are lowering inventories ahead of the Lunar New Year holiday. “With such carbide based PVC offers from Chinese sellers, other suppliers might find it difficult to introduce any large hike. We are on the wait and see now,” a regional buyer added.

In related plant news, Hanwha Chemical (Ningbo) is expanding its VCM and PVC capacities in May, lifting the output at each line by 100,000 tons per annum to 400,000 tons per annum. Commercial production is expected to take place in June.

On the other hand, Japan’s Keiyo Monomer is shutting its 200,000 tons/year VCM line in Chiba for 45 days maintenance starting mid-February.

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

Country
China  India  Indonesia  Malaysia  Philippines  Singapore  Thailand  Vietnam