After months of premium, India’s PVC market moves closer to par with SE Asia

18-Jun-15

India’s PVC market is moving closer to par with Southeast Asia, as per players in Asia. This comes after several consecutive months in which India carried a comfortable premium over SEA due to relatively healthy demand and local supply tightness, according to ChemOrbis. Since mid-Jan, average import prices on a CFR India basis have been trading with a comfortable premium over CFR SEA prices, according to data from ChemOrbis Price Index. The premium rose to as high as US$90/ton in early March and stood at US$50-70/ton as late as H2-May. Over the past three weeks, however, the premium has noticeably lessened and PVC prices to India are currently trading close to par with prices to SE Asia. A pipe manufacturer operating in India stated, “Demand has seen a significant drop off ahead of the monsoon season. A domestic producer implemented a decrease of INR4000/ton (US$63/ton) last week and we expect to hear lower July announcements in the import market as well.” A trader based in India commented, “Inventory levels are considered high in the local market while most converters are purchasing in only limited amounts these days. We expect to see lower import offers for July next month and we believe that domestic producers may agree to further reductions on their prices if the drop in July import prices is sufficiently large.” While prices were retreating in India, the Southeast Asian market held relatively stable, although some prices at the upper ends of the range faded from the market, according to ChemOrbis. A trader stated, “We managed to sell a total of around 3,000 tons to Southeast Asia this week, which we take to be an indication that demand is not bad. We expect to receive new July prices from our Taiwanese supplier next week. We believe that the supplier will rollover their prices in order to defend their margins.”