PVC sentiments begin to change for the medium term in China

04-Nov-10
In China, PVC prices have been following an upward trend for the last three months driven by tight supplies and rising production costs, as per Chemorbis. As the high season is fading, sentiments in China’s PVC market is beginning to shift, with some players, including a couple of producers, already admitting that they expect to see some softening in prices in December. According to data from ChemOrbis Price Index, import PVC prices in China have been rising since the start of August, with prices posting considerable increases ranging from US$30-40/ton since then. Offers for domestic PVC cargoes also rose by US$127-159/ton over the same period. Players attributed the increases seen this month to limited availability partly related to electricity rationing inside the country, firm feedstock prices and higher transportation costs for local cargoes. Until the start of this week, most players were predicting a largely steady trend in the country’s PVC market, with most players stating that the medium-term outlook was unclear especially after the Chinese Central Bank’s recent decision to raise interest rates. However, with the imminent winter season, as well as the upcoming year-end, which have already started to weigh down on end-product demand, sellers have started to comment that they have lost confidence in the market direction for the medium term, although most of them noted that their sales are proceeding normally for now. Some PVC sellers preferred to leave their prices unchanged week over week in order to watch the developments for a while to have a clearer idea about the future direction of the market. “Trading activities slowed down this week. We are holding low inventory levels as buying interest is inactive,” a distributor in China commented early this week. Buyers also confirmed their hesitancy in purchasing beyond their needs due to the materials sitting in their warehouses and fewer orders coming from their end-product customers. “Our sales are slowing down due to the approach of the low season,” a Chinese pipe converter reported. “We hope that PVC prices will move lower in the upcoming days,” another buyer stated.
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