Asian players predict stable to firmer trend for PVC in May

04-May-10

Most Asian market players are predicting stable to firmer prices in May, owing to high upstream costs. As per Chemorbis, buyers ended the last round of business seeking discounts, while sellers were firmly against any further reductions on their prices given their thin operating margins. While demand in the region has been relatively disappointing for this time of the year, sellers are finding support from upstream markets, where spot ethylene feedstock costs have been trending higher over the past few weeks. In China, most May import business has already been concluded with rollovers to slight discounts from the April done deal levels. Producers report that demand for May has been regular following a disappointing month in April, although May business was limited by unsold inventory from April amid a continuing influx of relatively cheaper cargoes from the US. Traders have confirmed that they imported about 10-15% more PVC from the US over the past month. For June, regional producers will either seek rollovers or slight increases of US$10-20/ton, on expectations of better demand amid persistently firm upstream costs. Concerns abound about comparatively cheaper US PVC- as falling spot ethylene prices in the US driving down the theoretical production costs for American producers. In Southeast Asia, producers are looking for rollovers or slight increases. Towards the end of the past month, a few buyers reported that their suppliers were willing to offer discounts of US$10-20/ton to speed up sales, but refused to concede to the even larger discounts to match buy ideas. Producers are faced with steady to firmer VCM feedstock costs and any further price discount will affect their profitability. Looking ahead to the next month, most converters have expressed their buy ideas with rollovers in the local markets, while producers have expressed their sell ideas with rollovers to slight increases from April sale prices. Demand in the region is described as normal for May following a month of relatively weaker demand on the week-long Thai New Year holidays in mid-April. Distributors and traders active in the Indian market were reported concluding some deals for May at prices approximately equal to their April done deal levels. Although demand from the local markets is not encouraging for the present, stable prices being predicted by for May based on firm upstream costs.