Weekly PVC Overview - Week 31 – 2018

Local demand in India revive after a weeklong strike, China market remains on the positive side

In Asia, trading activities in the PVC market showed some signs of revival as the weeklong strike in India ended that allowed a smoother flow of material. In the meantime, tight supply and peak demand season in China continue to push local prices higher, leading regional players to speculate on a firmer trend for September shipment offers from major producers.

In India, it is reported that Reliance maintained local PVC offers from last month ignoring the depreciation of the Indian Rupee. Demand is recovering, sources said, though sellers are not expecting any major recovery during the monsoon season. “Inventories at converter side is critically low after a week of delivery disruption. The pick-up in demand this time is merely restocking activities and buying interest would fade again once converters have completed purchases,” a trader commented.

Meanwhile, domestic PVC offers in China firmed up CNY100/ton ($16/ton) week on week thanks to the positive market condition including steady demand, tight supply and firm futures trading. At the time this report is published, carbide-based PVC is traded in the range CNY7000-7100/ton ($881-894/ton without VAT) and ethylene-based PVC is at CNY7400-7500/ton ($931-944/ton without VAT). 

“Major PVC pipe converters are ramping up production, which might support the near-term outlook. The recent strengthening in spot offers are also having the touch of the depreciation of the Chinese Yuan, however, strict environmental control is capping the run rate at most carbide-based PVC plants, which means, supply would remain tight,” a market source commented. 

Southeast Asia market is struggling to pick up and except for Indonesia market, where sellers claimed better sales result, other countries are facing the sluggish condition amid monsoon season. “We lifted local offers by $20-30/ton for August delivery. Market respond is positive, especially from the pipe sector. Stronger government spending on public infrastructure projects would continue keeping buying interest healthy throughout the remaining of the year,” a local producer in Indonesia said. 

While import transactions for August shipment are mostly done, regional players are returning to the local ground waiting for September offers from major overseas sellers. Most are looking at small to moderate gain month on month considering the current market condition.