Expectations call for softer Oct pricing in China

Sept. 13, 2018

In China, the import PVC market was quiet ahead of a major Taiwanese producer’s October announcement while the sentiment in the local PVC market remained weak over the week in line with retreating futures prices along with slow trading activities.

In the import market, the overall import PVC k67 prices for Asian origins were stable from last week to be reported at $960-970/ton CIF, cash. Meanwhile, US PVC cargoes were reported at $860/ton with the same terms, which were not included in the index. Lingering currency risks continued to keep buyers on the sidelines while players’ expectations regarding a major Taiwanese producer’s October announcement were mostly shaped by competitively-priced US offers. A source from a Taiwanese producer opined, “US PVC is still offering almost $100/ton lower levels when compared to other origins. Hence we expect the major producer’s October prices to indicate slight decreases.”

In the local market, prices for ethylene and acetylene-based PVC followed a largely stable trend when compared to last week. PVC futures on the Dalian Commodity Exchange witnessed a weekly decline of CNY105/ton ($15/ton) as of September 12. A trader commented, “Local prices were mostly stable this week while demand was slow and futures prices were weaker. However, buying sentiment is expected to improve given the peak-season for PVC applications and we think this factor may help the sentiment improve for the near term.”

Meanwhile, the weekly average of export prices for ethylene-based PVC from China has recently hit an eight-month low, according to ChemOrbis Price Index. Lower prices were mainly attributed to competitively-priced US PVC cargoes as well as weak yuan.

Local PVC prices may resume their softening trend in the days ahead if pressure from retreating futures prices continues. However, some players believe that demand may pick up in the midst of the peak-season which corresponds to the September-October period, leading to a recovery in prices. As for imports, the market direction will become clear based on the major Taiwanese producer’s October announcement, which is mostly expected to be revealed with slight decreases.