Tight supply, higher costs keep Asian PVC outlook firm for May

21-Apr-11
PVC prices in Asia have continued to move higher for May in defiance of the reduced consumption in China owing to the Chinese Central Bank’s recent decision to raise reserve requirement rates, as per Chemorbis. Extremely tight import PVC supplies across the region, rapidly rising domestic PVC prices in Southeast Asian markets as well as US$100/ton higher May sell ideas sought by Asian producers for VCM are said to be the main factors paving the way for new price hikes for next month. Import availability to China and Southeast Asia has been squeezed due to the absence of both American and Japanese supply sources, who accounted for almost 60% of China’s PVC imports from January to March. Following the March 11 earthquake in Japan, PVC producers in the country are yet to run their plants at their normal capacities. According to market sources, Japan has started to import PVC to cover its production losses and American PVC sellers have been diverting their cargoes to Japan in order to feed the market. In China’s import PVC market, where April business was closed with US$65-70/ton increases, May spot deals are settling at prices at or close to Asian sellers’ initial levels following US$30-85/ton hike requests over April done deals, with producers describing demand towards their new prices as “normal”. Players expect prices to continue firming up over the near term in line with limited import availability and stronger VCM feedstock costs. In Southeast Asia, PVC buyers have been showing an increased appetite for import cargoes due to restricted domestic availability as a result of a VCM shortage and rapidly rising domestic prices in turn. This week, import PVC prices to the region rose by US$20/ton at both ends week over week. A trader, who offers Taiwanese PVC, reported concluding US$10-15/ton higher deals compared to their most recent done deal levels, while a Thai producer revealed May sell idea with significant increases of US$100-130/ton over April. Sellers are predicting that PVC prices will remain firm over the coming month due to greater demand for import materials.
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