Actylene based PVC faces downwards pressure in China

16-Nov-15

The gap between acetylene based and conventional PVC in China has widened to US$100/ton recently, as revealed by ChemOrbis Price Index. The general sentiment for PVC remains bearish in the country ahead of December price announcements. This is due to lackluster demand owing to a slowing economy while the pressure on acetylene based PVC appears to be more visible considering the fact that firmer spot ethylene costs in Asia lend support to the conventional ethylene based product. Spot ethylene prices on CFR Northeast Asia basis moved up by US$20/ton since the start of November. The gain was more notable at around US$95/ton with respect to a month ago as reported on www.ChemOrbis.com. A source from a Chinese producer reported that they sold out their November shipment cargos and closed their export business for the month. “We continue to offer to the domestic market though. Meanwhile, we are mulling over conducting a 1 week turnaround at our plant in December although the date is yet to be set. We have not heard of any reduced output from carbide based PVC producers so far but it would not be surprising considering market talk that the government has issued new environmental policies,” the source stated. A different PVC producer reported that demand is very weak now that winter started in North China and the low season for some PVC applications has begun “The prevailing prices stand below the same period of two years ago due to the slower economy and construction sector. We are not so optimistic about the market outlook over the short term and expect further drops for the latter part of November,” the seller commented. A manufacturer reported weak end product demand given seasonal reasons. The buyer also blamed the slowdown of investment in property which resulted in lower PVC consumption. “Buyers refrain from building extra stocks which exerts pressure on producers to cut their offers. Nonetheless, we expect conventional PVC prices to gain stability towards the year end supported by higher ethylene prices. We are not optimistic about carbide based PVC for the future term though,” he argued. “Overall trading activity continues to be sluggish and some acetylene based PVC makers are already facing losses. Some price levels are near production costs which may cause companies to trim down their operating rates,” a trader based in Shanghai mentioned.