China’s PVC market facing challenges from cheaper US cargoes, rising supply in SE Asia

China’s PVC market has been stable to slightly firm in June even as prices in other major polymer markets have recorded steep month-on-month declines as per ChemOrbis. Although players inside China are predicting a steady PVC trend, this outlook is being challenged by softening prices for American PVC in other global markets as well as reports of rising supply levels in Southeast Asia, which has been an important export destination for Chinese PVC in the past month. June import PVC business is said to be around 80% concluded in China, with done deal levels for mainstream Asian origins US$10-30/ton higher when compared with May done deal levels. Domestic PVC prices have also tracked a largely stable trend over the past month, with prices for both acetylene and ethylene based PVC in the local market currently being reported steady on the lower end of the range and CNY100/ton (US$15/ton) lower on the upper end of the range when compared with the same period of last month, according to data from ChemOrbis Price Index. During the same period, import prices for HDPE film declined US$50/ton on both ends of the range while import prices for homo-PP injection and raffia fell US$110-120/ton. Players pointed to limited import availability from major import PVC sources along with firm VCM feedstock costs as the main reasons for the relative strength of PVC prices when compared with other major polymer markets. PVC demand has also been said to be relatively strong inside China, with most converters purchasing their normal amounts this month on satisfactory demand for their end products. However, some players are beginning to speculate that PVC prices in China might soon begin to move lower in accordance with the declining trends seen in other markets. Lower offers for American PVC have been reported in other markets such as Turkey and Egypt, prompting some sellers to predict that import prices to China will be pulled lower next week by the threat of cheaper American imports. According to data from Chinese Customs, American PVC has accounted for 31.7% of all PVC imports to China in the first 4 months of 2011, making the US the largest PVC exporter to China on a year-to-date basis. Players in Egypt report that import offers for American PVC have declined by US$49/ton on a CIF Alexandria, cash equivalent basis this week, with American PVC prices to Egypt posting cumulative declines of US$78-89/ton since the last week of May. In Turkey, offers for US PVC on a CFR Turkey, cash equivalent basis declined US$30-45/ton this week, with US import PVC prices to Turkey having fallen by US$55-90/ton since the last week of May. Rising PVC supplies in Southeast Asia could also pose a challenge to sellers hoping to keep their prices to China firm in the coming weeks, as Southeast Asia has been a significant export destination for Chinese PVC over the past month. Players in the region have commented that availability of Chinese PVC has become significantly larger recently as the region has witnessed a steady influx of Chinese PVC over the past few weeks. Sellers offering Chinese PVC to Southeast Asia reported that they reduced their prices by US$15-40/ton this week, with the current week marking the third consecutive week that Chinese PVC prices have been lowered to Southeast Asia. Since the last week of May, Chinese PVC prices have fallen US$45-50/ton within the region.