Asian PVC outlook turns bullish on supply issues, robust demand from India

Asian PVC suppliers have started to reveal their June offers to export destinations including China, Southeast Asia and India this week, as per ChemOrbis. After the May PVC business was concluded with rollovers to small price increases in different parts of the continent, sellers were mostly optimistic about demand for June pointing to the high season. Indeed, demand from the Indian PVC market remains robust, according to many players. The emerging supply issues also contributed to the firm stance of sellers in their quest for price increases. A Taiwanese major encountered some unexpected technical problems at one of its VCM plants at Mailiao early last week, which have recently been resolved. A company source had informed ChemOrbis, “It shouldn’t take long to bring the plant back into operation.” The plant has a capacity of 800,000 tpa. This week, the same producer revealed its June PVC prices with an increase of US$20/ton to China and Southeast Asia and US$40/ton to India. Even though the source from the company said that they do not know if this outage will have any possible impacts on the downstream PVC production, an agent of the producer claimed, “Supplies from the Taiwanese producer will be limited until September. Our June allocation is already 30% below our normal quota.” He also argued that the producer is planning to focus on selling to India, where US supplies are limited and a domestic producer is having some supply issues. “Indian buyers may be willing to accept the producer’s hike requests for June,” he said. A trader based in Mumbai reported having sold out his June allocation with monthly increases of US$40/ton immediately after they received it from the Taiwanese producer as it was small. A second trader in Mumbai said, “The producer is open to discounts of US$10/ton for 1000 tons and above. We have been provided very limited volumes as the producer blamed their production issues.” The trader also informed that Reliance is having some supply issues and they raised their prices in the local market, supporting the firm scene in the country. “Demand remains healthy in India as we have already managed to conclude deals at the new higher levels,” he added. A PVC manufacturer in Mumbai also affirmed that they purchased 800 tons of PVC k67 from the Taiwanese producer, accepting to pay the hike request of the producer. “We couldn’t obtain any discounts in our deal. Local demand may remain good in India as long as supply issues persist,” he commented. A Japanese producer also acknowledges that PVC demand from India remains better than from China and Southeast Asia. “The Indian PVC market is offering better netbacks than other markets and we are considering shifting more of our allocations to India this month,” a company source said, adding that they will continue to offer to their regular customers in China and Southeast Asia. The producer also informed that they have been running their PVC lines at reduced rates due to the maintenance shutdown at their VCM supplier, Tosoh. Hence, the producer thinks that the PVC market will maintain its upward momentum in the near term. According to ChemOrbis, a South Korean producer also reported limited allocations. Like others, they are planning to provide more quantities to India. “Our current offers will not be able to compete with other origins in Southeast Asia, although we think we will be able to conclude satisfactory deals in India without conceding to large discounts this month,” a company source said.