Local carbide based PVC in China softened

This week, major carbide-based PVC producers in China decided to down adjust their domestic offers despite higher import prices from international suppliers. This comes as a surprise to many market participants, especially when major Taiwanese maker reportedly sold out higher-than-usual December allocation to the country within only two days. 

A carbide-based producer in Xinjiang who dropped their offers by CNY250/ton ($36/ton) compared to last week, reaching CNY7750/ton ($958/ton without VAT) said, “The volatile futures market is pushing our customers to the side-line. Many customers in the construction sector claimed to have stocked up sufficient inventories, therefore buying interest is rather weak.” 

Zoom in more closely, even after the price cut, the maker’s offer is still CNY445/ton ($64/ton) higher than today’s closing prices on futures market. And that has left the arbitrage window widely opened to traders, who are dealing with both spot and futures trading. These activities, therefore, easing spot supply condition in China slightly. 

Another producer based in Inner Mongolia added, “We were trying to hold firm on our prices earlier this week; yet forced to cut CNY100-200/ton ($14-29/ton) later as market resistance built up. The transportation issues are now partially resolved, allowing smoother flow of material between Northern area to Southern and Eastern China. Our supply is still tight, therefore we are not expecting any further reduction in the coming days.” 

Local carbide based PVC is now traded in the range CNY7650-8200/ton ($946-1014/ton without VAT), FD China, cash term.