The Taiwanese producer announced a $120-130/ton cut in its January PVC offers to China and India earlier in the week, which came in tandem with market expectations. Its new PVC K67-68 prices stand at $1590/ton CIF India and $1360/ton CFR China. The Taiwanese major also cut its export offers by $190/ton to $1270/ton FOB Taiwan.
NEA suppliers follow with lower offers
Soon after the Taiwanese pricing was notified, a South Korean supplier that didn’t offer any Dec material to India because of a turnaround, offered at $1600/ton CIF for PVC K 67-68. It typically offers at a slight premium to the Taiwanese major’s prices. Another South Korean producer cut prices by $140/ton to $1590/ton CIF India. A smaller Taiwanese producer also cut prices by $120/ton to $1590/ton CIF India, equalling its major compatriot’s offers.
Meanwhile, a Thai producer’s offer to Indian buyers was heard at $1610/ton CIF.
While the Taiwanese major’s import pricing was on expected lines, traders said the deeper cut in the FOB Taiwan prices pointed to further bearishness ahead. “What this indicates is that the market direction is looking further south in the near term. There is now a $320/ton difference between Indian import and Taiwanese export prices. This is a wide gap, even given the rising freight rates currently. This would certainly pressure import prices further,” an Indian trader said.
Downward pressure intensifies on Indian market
Another trader said the bearishness could continue for some more time in India, the largest buyer of PVC in the world. “Infrastructure projects are not that vibrant currently and we expect them to start getting active only in the new financial year starting April, 2022.”
Meanwhile, importers in the Indian market were still waiting for deliveries of material booked in mid-to-end October at prices above $1900/ton CIF. “This could pressure the market further. We can only hope this would not lead to payment and delivery defaults because of the high pricing gap currently with the October prices,” another Indian trader said.
ChemOrbis Price Wizard shows Indian import prices have currently fallen by almost a quarter from the peak levels prevailing in mid-to-end October. “There is huge pressure on import prices as domestic offers have kept falling. We find parcels in the local market changing hands at deep discounts to a major Indian producer’s posted prices,” said another Indian trader.
China’s export prices could fall further
Export offers from China were reported at $1350-1400/ton and $1250-1300/ton, both FOB China, cash, for ethylene and acetylene based PVC respectively. Its prices were stable to $50/ton lower from the previous week’s assessed prices.
“The Taiwanese major’s considerably lower FOB pricing means Chinese export prices will likely fall further,” said a trader. “This means pressure on import prices to the Middle East destinations such as Turkey and Egypt, apart from cargoes to Southeast Asia” he said.
The buying sentiment in the Chinese market is also weaker due to the winter season. Market players have been eyeing the Dalian futures market, which has also been weak in the recent weeks. “We may see values falling further in the week ahead,” he added.
Japanese producers would follow the major Taiwanese producer on their CFR China offers at $1360 CFR China. “For India, it’s still tentative, but notionally, $1750 CFR India is in line, since Formosa’s offer is $1590 CFR India, as Japanese origin material has zero customs duty,” a source at the producer said. Another Japanese supplier echoed similar comments and prices.
Southeast Asian prices follow import offers lower
In Southeast Asia, too, domestic and import prices continued to be pulled down in the latest week amidst fears over Omicron. “Chinese PVC offers have also fallen further. Buyers are still cautious and have been limited in their commitments. Thai offers also continued to edge lower,” said a converter in the Philippines.
by Shibu Itty Kuttickal – sikuttickal@chemorbis.com
