Domestic PVC continue to rise in China

Chinese players reported that this week local offers for both carbide based and ethylene based PVC cargoes increased another CNY300-400/ton ($44-59/ton) from last week thanks to strong futures market and persistent supply tightness condition. However, demand is remain stable ahead of the off peak season during winter.

An ethylene based PVC producer, whose offers stand at CNY8100-8150/ton ($1018-1024/ton without VAT), EXW China, cash term said, “The biggest issues at the moment is transportation, which limit the flow of material to Eastern and Southern China area. We visited several pipe converters recently and some have reduced operation rate by 40% due to high material costs. This is nota very good signs to suppliers.”

Meanwhile, carbide based PVC makers are holding very firm on their cargoes claiming thin profit margins stemming from high feedstock costs. On average, domestic carbide based PVC offers stand at CNY8100-8250/ton ($1018-1037/ton without VAT), EXW China, cash term. A market source informed, “We heard rumors about government interference to minimize market speculation on coal prices, however, our carbide based PVC suppliers are very steadfast on their cargoes, pointing to strong support from futures trading. We think market would sustain the stable to firm trend in the near term.”

Players in the country are also awaiting December offers from Taiwanese producer with much expectation for another hike. On the other, allocation from the maker is projected to be better and if there are any troubles on VCM supply due to CPC’s ethylene pipeline migration, January allocation would feel stronger impact, sources said.