Lower US prices signal downward move in China’s PVC market

23-Jun-11
American offers to the Mediterranean countries of Egypt and Turkey have been steadily declining since the beginning of June as per ChemOrbis . When compared with falling prices in the Mediterranean region, offers to China were steady to higher for June business from American and Asian origins when compared with May. Overall import business was mainly closed in China US$10-30/ton above May done deal levels. This was due to firm VCM feedstock costs in Northeast Asia along with comparatively tight supply in that region in the first half of June as a result of the reduced June allocation from a major Taiwanese producer, Formosa, who is facing ongoing difficulties at their plant. For July business, market players in China are quiet about their expectations this week saying the outlook is unclear yet, particularly as Formosa may withhold official price announcement because of limited stocks. However, while sellers report being satisfied with their June volumes sold to China, American PVC prices have seen massive decreases in Egypt and Turkey. In Egypt, where the initial PVC offers from the US had been in line with those seen in China earlier in the month, prices decreased gradually over the course of the month, losing over US$100/ton for American origin. Currently, US offers to Egypt are roughly US$100-150/ton below the last reported done deals for American PVC to China. American PVC offers to Turkey also plunged from the start of June, posting US$55-120/ton decreases for this origin. At the start of June, American PVC offers to Turkey were above the offers to China while they have moved well below these levels now. With plunging US prices in other markets, it appears that prices to China could come under downward pressure for next month’s round of negotiations when July business opens up. Tight regional conditions have been a supportive factor this month for China’s PVC market, but players in the country reported relatively worse demand this week when compared to past weeks particularly following monetary tightening by the Chinese government last week.
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