Players predict another month of PVC increases in SE Asia, India

Players in Southeast Asia and India are predicting significant upward movement in both local and import PVC prices for the month of April based on widespread concerns about possible VCM shortages leading to reduced PVC production, as per Chemorbis. Most producers in the region source their VCM needs from Southeast Asian and Northeast Asian suppliers. Much of the concern over worsening VCM supplies has been triggered by the March 11 earthquake in Japan, Asia’s largest VCM producer. While the full ramifications of the Japanese disaster for the petrochemical industry are not yet apparent, regional players are nevertheless predicting a reduction in VCM supplies from Japan and tightening in Southeast Asia, where non-integrated producers have started to operate plants at reduced rates owing to disruptions in VCM supplies even before the earthquake. The quake may result in reduced availability of VCM and several other petrochemicals, and also result in substantial losses in the Japanese stock market as well as the shuttering of a number of downstream converters. Though supply is expected to be limited in the coming month, the demand outlook is generally said to be positive on the approaching high season for the construction sector in the spring months in both India and Southeast Asia. In India, traders expressed their April sell ideas for South Korean PVC with increases of around US$40/ton from the most recent March offer levels, commenting that their South Korean suppliers have informed of a possible reduction in allocations to India next month owing to healthy demand from other export markets. Given comparatively limited local availability as well as expectations of higher import prices, distributors in the country predict that domestic producers will announce price increases of around INR2000-3000/ton (US$44-65/ton) over the coming week. In Southeast Asia, a major Thai producer expressed April sell ideas with increases of US$90/ton when compared with March done deal levels on expectations of reduced availability in the coming month. A reduction in their export allocations for April was being planned before the earthquake in Japan. A Malaysian producer has withdrawn offers from the market this week based on concerns over the supply outlook for the coming month, as they mull increases in their offers by around MYR150-200/ton (US$49-66/ton) before returning to the market next week. Buyers in the country confirmed that offers for domestic material have become increasingly scarce this week, although they added that they have still been able to locate enough material to cover their immediate needs.