Asian PVC players: Will prices see respite from rising streak in March?

Feb. 12, 2019

Import PVC prices in Asia have tracked a firming path since they dropped to around a one-year low in mid-November. The rising trend over the past three months has been attributed to buoyant demand particularly from India and limited supplies across the region.

Players are now questioning if the PVC market can sustain its rising trend in March in the midst of the week-long holiday in China and the upcoming elections in India.

PVC posted increases for three consecutive months

Pioneered by a major Taiwanese producer, the import PVC markets in Asia have gradually increased for the past three months, posting a consecutive gain of around $55-75/ton as data from ChemOrbis Price Index indicate.

The major producer announced its December, January and February prices with $20/ton hikes on a monthly basis.

Demand retreats in China and SE Asia ahead of holiday season

The rising PVC trend has recently lost momentum in China and in Southeast Asia in line with the approaching Lunar New Year holidays. Import prices were mostly stable this week amid thin trading as most converters shut their factories and left their desks for the holiday season.

“February will be a short month in terms of trading due to the holiday. We don’t expect buyers to return to their desks before mid-February. Limited demand should weigh on the sentiment and PVC prices might break their three-month rising streak in March,” a trader in China commented.

India’s demand remains good, yet outlook murky on upcoming elections

In India, PVC demand remained strong this week thanks to the ongoing high season. Buyers were willing to accept the current price levels in done deals. According to a few traders, however, the market might face uncertainty in March ahead of the general elections which are due to be held in India between April and May.

“Buyers might turn cautious prior to the general elections. Hence we don’t think that the market can absorb further hikes in the near term,” opined a trader.

PVC supplies expected to be limited in Q1

The PVC market is likely to receive support from the planned shutdowns at some US and Japanese producers’ plants during the first quarter of the year.

According to sources close to the company, Taiyo Vinyl Corporation is planning to shut its 310,000 tons/year ethylene-based PVC unit in Yokkaichi, Japan in March for a month-long turnaround.

In the US, Westlake is planning to shut its plant for maintenance in February while Shintech’s giant PVC capacity is expected to be offline in March.

Spot ethylene soars to around 4-month high

Surging ethylene prices in Asia should serve as another supportive factor for PVC prices in the near term. According to data from ChemOrbis Price Wizard, the weekly average of spot prices on CFR FEA basis has recently hit its highest level since October on the back of strong demand and supply limitations.

A PVC trader in China said, “We expect to see a mostly stable trend after the holiday as limited demand should dilute the impact of low supplies and firm costs.”

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