Weekly PVC Overview - Week 7- 2019

March shipment offers expected with hike. Costs factors play a central role

The Asian PVC market is rather quiet on the first trading week after the long Lunar New Year holiday. Players are waiting for major producers to announce March shipment offers, which might emerge higher in the coming week. Stronger upstream costs are the main factor supporting such expectation, however, buyers are not seeing any drastic increases given the soft demand condition in main importing countries.  

A number of players have not hesitated to express the expectation for $10-20/ton hike citing the support from strong upstream costs and tighter supply condition. In fact, ethylene prices surged to a five-month high on 14 February to $1180/ton CFR Northeast Asia and $1070/ton CFR Southeast Asia, while supply for VCM and EDC is rather limited. 

In the meantime, demand in India – the largest PVC importer in the world has been showing signs of recovering from the traditional off-peak season. Despite the financial year in March and the General Election in April, players are optimistic about the near-term prospect in this market. 

“Customers would be even more active once the winter in Northern India is over. A $10-20/ton increased in new prices might not harm the purchasing interest so much,” a trader added.

In China, most converters have not fully returned to work after the weeklong Lunar New Year holiday and the issues of labor shortage might prevent plants from achieving normal run rate for several weeks. At the time this report is published, local ethylene-based PVC is at CNY7000/ton ($893/ton without VAT) while carbide-based PVC is at CNY6400-6450/ton ($816-823/ton without VAT), all based on EXW China, cash equivalent.

“We are waiting for import offers, but prices might remain on the stable to firmer track. We have replenished some quantities before the holiday, therefore, we are not in rush to make new purchases,” a buyer said.

Sentiment in Southeast Asia is not strong either. On the bright side, strong ethylene costs and healthy prospect in India has given more confidence to the market. While sources acknowledge the possibility of higher prices, many buyers prefer to wait-and-see the state of demand and supply in China.  

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: