Asia Weekly PVC Overview (Week 17, dated 24 - 28 April 2017)

May businesses concluded, June outlook remains on stable to softer note

In Asia, most businesses for May shipment have been concluded and players in the region are discussing about possible market direction for June. Despite the strong cargoes off-take for May shipment, many Indian buyers are still expecting further reduction in the coming month. In contrast, carbide based PVC makers seem to take firmer stance on their offers, claiming negative profit margins.

An Indian buyer expressed the opinion saying, “We think that actual demand in India is still way below expectation and therefore market still has room for further reduction. We do expect another $20-30/ton discount on import offers from international suppliers in the coming month before market could reach the bottom.”

Besides, players in the country are also poiting to the possibility of receding demand in the near term ahead of the fasting month. “Though monsoon season has yet to take place, the current weather condition is als not very favourable to construction sector. Many converters are still facing weak demand for end products, hence we are not very confident about the outlook for June shipment,” a trader added.

Buying interest within Southeast Asia remains largely calm and buyers are showing reluctance in making large purchases. A Vietnamese buyer informed, “Domestic prices dropped considerably this week and we only replenished a small quantity from import ground. We are still carrying large quantity of previously purchased cargoes at higher levels. Market might need more time to digest the current stock, hence it is less likely that import ground could revive in the near term.” However, the lower end of the overall price range, especially for carbide based PVC appears to be stable this week, with no prices below the $750/ton threshold reported.

In fact, several Chinese producers are taking firmer stance on their offers after implemented drastic price cut in the previous weeks, which bringing local prices to multi months low levels. A carbide based PVC producer said, “Operating rate among Chinese makers shall reduce as summer is approaching. Though purchasing activities are still weaker than expected, we prefer to hold our prices stable to monitor further development. In addition, our offers are already at the CNY5600/ton ($695/ton without VAT), which is very competitive.” The maker also refused any further price negotiation on export offers.