Asia Weekly PVC Overview (Week 50, dated 11 - 15 December 2017)

India market accepted January shipment hike, firming trend to persist

Week 50, dated 11 – 15 December 2017

In Asia, major Taiwanese producer announced fresh offers for January shipment with $20/ton increased from last month. Indian buyers have enthusiastically accepted the hike, leading the maker to complete selling all quantity allocated to India within an hour. The firming trend is expected to persist in the coming months.

The hike was essentially below market’s initial expectation of $30/ton and deals are concluded in the range $900-910/ton CIF India, LC AS term. International traders have closed deals even before the price announcement, as Indian buyers start stocking up inventories ahead of the traditional high demand season. “Market outlook for the first quarter of 2018 is very bullish, which explained to the aggressive purchasing activities this time,” a trader said.

However, there is a potential risk that end product businesses in India might not recover in full and quick as expected since many companies are still struggling in the post GST term. “In this event, supply in India would become bloated by February and this is the least desirable condition for any traders or stockist.”

In China, trading activities seem to be calmer from the previous week as futures trading loses steam. Spot suppliers still lifted offers by CNY100-200/ton ($15-30/ton) while deals are seen at CNY50/ton ($8/ton) lower. Carbide based PVC ranging CNY 6500-6650/ton ($840-860/ton without VAT) while ethylene based PVC reaches CNY7000/ton ($905/ton without VAT), all based on EXW China, cash equivalent.

Sellers in the country are no longer facing inventories pressure as reported in the previous week that many have sold parcels for February delivery now. “Market might not be so bearish despite the long Lunar New Year holiday. Many of our regular customers in the pipe sector are expanding plants due to high number of end product orders,” a trader informed. Export offers from Chinese suppliers might be limited in the coming weeks given healthy local demand

Meanwhile, customers in Southeast Asia are more reluctant towards the latest price levels citing the availability of more competitive cargoes in local ground. However, with demand in India and China showing signs of improvement which might pushes prices higher in the near term, buyers in Southeast Asia might need to consider fresh purchases.

A Vietnamese pipe maker received various PVC offers at $870/ton for Japanese origin, $850/ton for USA origin and at $850/ton for Taiwanese origin, all based on CIF Vietnam, LC AS term. The source bid $20/ton lower for Japanese material, saying, “The supplier rejected our bids immediately. Local suppliers might only announce new offers by end of the month; meanwhile we might negotiate with overseas sellers for cargoes arrive after Lunar New Year. Demand for our end product is good.”   

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