May PVC sell idea in Asia on the rise, players will watch US

Early this week, a major Taiwanese producer’s May sell ideas for PVC to China seeks price hikes for cargoes, akin to the past five months, as per ChemOrbis. May PVC sell ideas are reported to be US$20-30/ton higher vs April deals triggered by higher costs. A source from the producer commented, "We were satisfied with our sales for April and are planning to seek some additional hikes for May owing to firmer feedstock costs." In the feedstock markets, ethylene costs are currently standing US$80/ton above levels seen in the beginning of March, although they have mostly stabilized since early April. In the VCM market, spot prices continue to firm up albeit by slight amounts. Following the small gain of this past week, the spot VCM market is now US$20/ton higher than the beginning of March and US$10/ton above levels seen in the beginning of April. The ongoing supply constraints are the main reason behind the firming VCM market, says ChemOrbis. This past week Japan's Tosoh delayed the restart of its 260,000 tpa No 1 VCM plant to early May from April. The company’s No 1 VCM plant was shut in mid-October for maintenance, that has been shut since then after a fire and an explosion at the 550,000 tpa No 2 VCM plant in mid November. The company’s 400,000 tpa No 3 VCM plant has also been offline since the fire and it is expected to remain shut until early or mid June. Taiwan’s Formosa is also planning to have a maintenance shutdown at one of its 240,000 tpa VCM plant next week for three weeks. Other Asian producers may follow the lead and announce similar price increases for May PVC cargoes. However, it is not clear whether sellers of US material will follow suit with increases as April offers for US cargoes were generally above those of their Asian counterparts and are already near or matching the new May sell ideas. Indeed, due to the non-competitive offers for US cargoes for this month, little demand was reported for this origin out of China. US sellers could be starting to feel the effects of the slow Asian demand as high end prices of US origin PVC have come off in Turkey and Egypt this past week. In the American market, domestic players have commented that demand could slow in the next few months since many converters have already done their restocking ahead of the season. Current US PVC prices are supported by high ethylene and VCM costs in the US, but it is unclear whether there is additional momentum to add to the current price level.