Softening signals in Asia for October PVC business

15-Sep-11
Producers and traders throughout Asia generally concur with the idea that overall PVC sentiment is not so strong, as per ChemOrbis. This has already found reflection on the region’s local markets including China, India, Indonesia, Malaysia and Vietnam, where decreases have been reported so far this month, albeit not in large amounts. This is mostly because of the gloomy outlook of the global economy amidst renewed fears of recession in USA and the Eurozone plus tightening monetary policies in China to combat inflation and in Europe due to possible debt default. As a result, end product demand has stalled for PVC applications as several converters in China are running their plants at around 50-60%, with some even suspending their operations due to unprofitable margins. While import PVC business for September continues to settle in China, the overall done deal level reported so far indicates a rollover at the low end and a US$10/ton increase at the high end when compared to last month, with most deals concentrating close to the low end. More traders remarked that they are not happy with their sales performance and are feeling coerced to revise their offers slightly down from their initial offerings this week. Import PVC offers from the US are exerting pressure since September done deals are now placed US$20-30/ton below August. Most players feel that the sentiment will remain bearish for the near term as there is little hope for a revival of end product demand. Not only demand, but also softening feedstock costs for ethylene and VCM are also contributing to the bearish expectations. Although there is no firm price idea that has surfaced so far for import business, some traders in China are now speculating about US$20-40/ton decreases for cargoes to be shipped next month. As the downward trend is yet to be visible on China’s import market on a month over month basis, Southeast Asia has already witnessed clear decreases in import and export deals for September. Approximate decreases of US$90-100/ton have been reported in import offers to the region on CIF SEA basis since the beginning of the month while US and Mexican PVC offers have recently started to match the bids of buyers at the very low end of the range in India. In the meantime, local markets in Indonesia, Malaysia and Vietnam as well as in India continue to lose ground on a weekly basis. Regardless of these price cuts, buyers in Southeast Asia and India prefer to shy away from new purchases, anticipating that the downward trend will persist for some time more. First and foremost, they argue that the PVC sentiment is bearish on a global scale and poor demand is likely to leave no chance for sellers to hold their offers at firm levels but apply further decreases on their offers.
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