Weakening PVC outlook weighs down on VCM in Asia

Few VCM deals for August delivery were reported at US$900-910/ton for South Korean and Japanese origins on CFR Far East Asia basis, representing decreases of US$40-50/ton when compared to the initial August announcements at US$950/ton, and a mostly steady trend when compared to the July done deal level at US$900/ton, as per ChemOrbis. Players argue that initial increase targets for August VCM business could not find support from the downstream PVC market, where the outlook is mostly considered weak. Indeed, VCM prices in Asia have been on a weak note almost since the beginning of June. Poor buying interest from the PVC market as well as financial concerns about the interest rate hikes of the Chinese government were mainly blamed for the ongoing softening in the VCM market. When looking at the recent situation in the downstream PVC market, Chinese players report that sellers in the domestic market are mostly holding their offers steady this week following last week's price cuts of CNY50-150/ton (US$8-23/ton) although some are still ready to offer discounts for firm bids due to sluggish sales. Not having a clear idea about the direction of the market, many buyers and sellers prefer to hold their wait and see stance, report Chinese players. In Southeast Asian PVC markets, the upcoming Ramadan holiday that is to be celebrated at the end of August and beginning of September in the region's Muslim countries is already weighing down on buying interest since many buyers are currently sidelined and are planning shutdowns. Plus, the majority of buyers say they have already built stocks to last until early or mid September and therefore, players do not think that demand can revive in the region before the end of September. Regional producers are holding their offers unchanged so far this week while several of them admit that their sales are slow and they do not have a clear opinion about the future direction of the market. A number of buyers also voice their expectation about seeing lower prices in September. In India, local prices moved down this past week like in China with sellers cutting their offers by INR2000-2500/ton (US$45-56/ton) with the aim of spurring buy interest while a distributor said even the price cut did not help entice buyers. Import offers to the region also registered US$20-30/ton weekly decreases while a Vietnamese producer offering to the country this week US$30-40/ton lower than last week commented that he is still not receiving any response from Indian buyers.