January PVC prices set to move south in Asia

After six consecutive months of price increases, PVC prices in major Asian markets have begun to lose ground as import PVC deals for January start to settle with decreases in China, as per Chemorbis. Import PVC prices have also moved lower in India, while players in Southeast Asia are expecting lower January offers from regional producers. In China, initial January deals for Japanese origins have begun to settle this week at prices US$10-30/ton below the December done deal level for mainstream Asian origins, while initial January deals for American PVC were settled with steeper discounts of US$40-50/ton when compared with the December done deal levels for this origin. A trader offering these cargoes commented that they have been receiving more inquiries from their customers since they conceded to reductions on their offer levels and have managed to sell out around one third of their January allocation at their new price levels. Major Asian producers had announced their initial January offers last week at prices stable to slightly below the December done deal level, conceding to lower prices for January in the face of sluggish demand in China as well as in other major Asian markets such as India and Southeast Asia. Although Chinese buyers had been showing greater interest in imports over the past few months owing to strong domestic PVC prices, import offers have begun to lose their competitive edge over local prices as domestic prices have declined by CNY450-500/ton (US$68-75/ton) for ethylene based PVC and CNY750-800/ton (US$113-120/ton) for acetylene based PVC when compared with the levels observed in mid-November at the height of the recent rising trend. Offers for domestic PVC have been pulled lower by expectations of rising supply levels from the start of next month as the expiration of the government’s power rationing program will enable many acetylene based PVC producers to raise their operating rates. January import offers have also moved lower in the Indian market, where the overall offer range for mainstream Asian origins has declined by US$40-50/ton over the past two weeks as sellers have gradually retreated from their higher end offer levels in the face of persistently weak buying interest. Traders in India report that demand is very slow these days owing to a prolonged monsoon season while adding that local supply levels have grown uncomfortably high as buyers had been purchasing normally in anticipation of better demand after the Diwali holidays in early November. High supply levels in the local market have also encouraged Indian producers to shift more of their attention to their export business, while sellers offering domestic materials report that their current sales prices stand INR4000/ton (US$88/ton) below their early December offer levels. Poor demand from both India and China has led players in Southeast Asia to expect regional producers to agree to price decreases on their January offers to their local markets, especially as slower export demand will push more producers to raise their allocations to local buyers in the coming month. A Malaysian producer stated that they concluded some deals this week at prices MYR50-150/ton (US$16-48/ton) below their offer levels from the previous week, with the producer adding that they are mulling over an additional decrease of MYR50/ton (US$16/ton) on their January offer levels. A Philippine producer stated that they are also mulling over a decrease on their January offer levels as they were not satisfied with their December sales, commenting that buyers generally cut down their purchases by around 40-50% this month. An Indonesian producer who reported concluding their December business with $10/ton discounts from their initial offer levels this week predicted that domestic prices would be revised downward in January given softening regional trends.