Tight VCM supply raises March PVC

Polyvinyl chloride (PVC) producers in south Asia have raised their offers for March shipments following tightness in supply of feedstock vinyl chloride monomer (VCM), as per ICIS. Regional producers in India increased prices for March shipments by Indian rupees (Rs) 1.50/kg (US$27.59/ton) to Rs 65.5/kg (US$1,204.71/ton) EXW (ex-works) for March-shipping cargoes. The equivalent import parity for the revised list price stood at around US$1100/ton CFR (cost and freight) India. In Pakistan, a major PVC producer has raised offer prices for March cargoes by Pakistan rupees (PRs) 1.70/lb (US$38.18/ton) EXW to PRs66.10/lb (US$1483.86/ton) EXW, with an equivalent import parity of US$1120/ton CFR Pakistan. Earlier in February, PVC prices in south Asian markets rose by US$30/ton to US$1080-1100/ton CFR as northeast Asian producers hiked their offers for March shipments owing to higher VCM costs. These prices found limited response from buyers, which strongly resisted the price increase. Cheaper carbide-based PVC cargoes from China offered at US$1020-1035/ton CFR India additionally weighed on the buying sentiment for ethylene-based PVC cargoes, especially in the northern part of the country, that further dampened sentiment for ethylene-based PVC. Sources expect the market to absorb the current level of prices willingly, when supply tightens in March following the turnarounds at regional PVC facilities. Asian producers selling to India said they were optimistic of better demand owing to tight supply in March, and preferred to hold on to their offers for March shipments at US$1100/ton CFR India that is presently drawing lukewarm response from chief converters and traders in the region. PVC resin demand in India is said to be making a slower-than-expected recovery amid a prolonged winter and a lack of rainfall in the western parts of the country that has impacted the offtake of PVC pipes. However, demand is likely to see a boost in March onwards because of the supply tightness brought about by the turnarounds, according to market sources. March also marks the end of the fiscal year 2012-13, a traditional purchase peak season for PVC resin and pipes for agriculture and construction projects.
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