Asia Weekly PVC Overview (Week 42, dated 16 - 20 October 2017)

November shipment offers plunged, demand in India improved

In Asia, major Taiwanese producer announced November shipment offers to India with larger than expected discount of $60/ton month on month after facing tremendous hurdle in depleting October allocation to this market. Meanwhile, new offers to China and Southeast Asia fell $40-50/ton. Buying appetite in India seems to return and players are hoping this condition to persist in the coming month.

In fact, it is reported that major Taiwanese producer sold out November allocation to India soon after the price announcement as buyers rush to make replenishment before the Diwali holiday. “Most other suppliers have not announced new offers. However the latest cut from a Taiwanese major really got buyers attention. We hope post holiday demand to be healthy,” an Indian trader commented.

Meanwhile, a major domestic producer in India has also implemented IDN3000/ton ($46/ton) reduction on the latest offers compared to earlier this month. “Our price announcement was too near to the holiday, hence we have not received sufficient feedback on the offers. However, we are confident that demand would be healthy in the coming week, in line with the upcoming peak season,” a domestic producer added.

At the meantime, Southeast Asian buyers are not excited about the latest offers from the Taiwanese producer claiming that offers at $890-900/ton are still too high. Many are waiting for additional discount to emerge with a Vietnamese compounder said, “We have purchased some cargoes from another Taiwanese producer at $860/ton CIF Vietnam, LC AS term and therefore, we think offer at $900/ton is a little too high. Demand in China is falling and we are watching out for new development in India and hope to obtain more discount on other cargoes.”

Malaysian buyers also reported to have received fresh offer from a Thailand producer with up to $70/ton reduction month on month, bringing latest offers to $900/ton CIF Malaysia, LC AS term. Yet, Malaysian buyers are taking wait and see stance claiming that the downtrend might persist in the near term. “We hope to obtain additional discount on deals to make replenishment. Demand for our end product is regular, however with weakened buying interest in China and India, the pressure on Southeast Asia is tremendous,” a compounder commented.

In China, weak futures market continue to pull spot prices down for another week, cutting CNY100-150/ton ($15-30/ton) for both carbide and ethylene based PVC. Players started seeing a pile up in domestic inventories, causing bearish sentiment in local ground. “We are a bit concern about the near term market outlook as demand might diminish during winter season due to environmental restriction. We are watching out for the state of demand in India and Southeast Asia market, hoping to export some cargoes in the near term,” a local producer informed.

Futures market currently traded at CNY300-350/ton ($45-53/ton) below spot carbide based PVC, raising a risk that arbitrage traders might channel cargoes to spot ground to earn better margin, which could possibly press prices lower. Buyers here are taking very cautious stance at the moment.