Asian and European PVC players voice early July expectations

14-Jun-12
As economic concerns mount across the globe, PVC markets are draw a bearish outlook for another month in July, as per ChemOrbis. In Europe, Spain has had to ask for a bailout before problems in the deeply indebted Greece are resolved. Meanwhile, Asia’s main growth engine, China, may also face much slower GDP growth in Q2, according to news reports, of below 7%, despite the country’s efforts to stimulate domestic demand by lowering interest rates for the first time in four years and issuing subsidies for energy-efficient home appliances. June PVC business is being concluded with sizeable decreases from last month in China. However, the number of deals reported is quite limited as many buyers prefer to wait in anticipation of another round of price decreases in July. “Although we have received a Thai offer with further decreases for June this week, we are not considering accepting it as we think that the downward trend will be retained in July import offers in the midst of softening upstream costs,” commented a trader. Meanwhile, a domestic producer pointed to the comfortable supplies and unsatisfactory demand and said, “Further decreases may occur under these circumstances.” Likewise, the expectations about seeing further decreases in July PVC offers have kept Southeast Asian buyers away from the market recently. Players are voicing bearish expectations for the near term, says ChemOrbis. A Philippine producer, who has cut its offers this week, said, “We may continue conceding to price declines until July.” A trader also expressed his sell idea for Taiwanese PVC with further decreases, noting “We are not feeling optimistic about the near term.” Buyers in general maintain their waiting stance, buying as little as possible. Bearish expectations are dominating India’s PVC market too. The offers of domestic PVC producers are found high with respect to imports. Admitting to this situation, a source from a domestic producer said, “Local PVC prices may face new downward revisions in the next one month period, when the recently secured import cargoes arrive to the Indian ports.” A trader said that the market is very weak with all buyers remaining on the sidelines while an Indian pipe manufacturer remarked, “We have built enough stocks until August. Demand is quite thin and there is definitely room for further decreases.” In Europe, the picture is not so different. The PVC activity is restrained as buyers maintain their expectations about seeing further decreases in view of unpromising end product markets and comfortable availability. An Italian pipe manufacturer commented, “We have kept our purchase volumes to our basic requirements for the moment as we don’t want to hold high stocks while we are suffering from poor end product orders.” Most converters are reportedly working at reduced capacities due to the same reason. A source from a South European producer told ChemOrbis, “We expect to see some decreases in July as well albeit only in small amounts as producers’ margins are already poor.” Given the summer lull and the expected contraction in the Italian economy as well as the soft upstream markets, some Italian players are also expecting to see further declines until July.
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