Weekly PVC Overview - Week 28 – 2018

Market awaits August shipment offers with diverged expectation on the trend 

There are very limited trading activities in the regional PVC market as players are awaiting fresh offers for August shipment from a major Taiwanese producer. While Indian buyers are expecting stable to softer levels citing the weak demand condition, Chinese suppliers constantly raising the concern over tightening local supply, which could support the near-term trend.

In fact, demand in India has been dropping over the past couple of weeks due to the ongoing monsoon season. Earlier this week, a major domestic producer maintained PVC offers to local buyers compared to last month despite the depreciation of the local currency against the US dollars. 

“The smooth sales recorded in the previous month might not sufficient to support any hike this time. We are looking at the stable to softer prices for August due to weakened buying interest as well as the currency exchange issues,” an Indian buyer commented.

Meanwhile, Chinese players are complaining about the tightening domestic supply over the past weeks given the lower operation rate among most carbide-based PVC plants due to stringent environmental regulations. Local offers for both ethylene-based and carbide-based PVC are up CNY50/ton ($8/ton week on week, with a producer informed, “ We might not have any export allocation for August as we are clearing backlog now. Production costs are rather high due to limited carbide and liquefied alkali supply, and therefore, we are unable to concede to any discount.”

Chinese players also fear that the escalated trade splash between China and the USA might limit the import arrival for USA origin cargoes, which could drive buyers here to search for alternative sources. USA was the second largest PVC supplier to China in 2017, accounted for a total volume of more than 430,000 tons.

In Southeast Asia, demand remains largely calm across the region due to the rainy season, except for Indonesia, where purchasing interest among domestic players seems to be better. “We managed to sell a good quantity for July delivery at $20/ton increased. Demand for the second half of the year is expected to be better,” an Indonesian producer informed.