On the same par then far apart: Ethylene and carbide based PVC in China

After three months on continuous increases, domestic offers for carbide based PVC in China has been weakening for three weeks in a row now. Compared to the peak recorded during mid of November 2016, carbide based PVC have dropped approximate CNY375/ton ($54/ton) this week. Players are blaming the weakening futures market and ease in transportation issues, which alleviate the supply tightness condition for such rapid drop. However, this has widened the price gap between ethylene based and carbide based PVC.

In fact, while carbide based PVC sharply went down, ethylene based PVC remain mostly stable, creating a gap of about CNY550/ton ($80/ton) between the two grades after a brief period trading on the same par, which is much larger than usual price differences. A buyer in the country commented, “We think very likely that ethylene based PVC might see downward adjustment in the coming days to shorten the gap, especially at the current demand condition.”

An ethylene-based producer added, “We are still holding wait and see stance to monitor further development before taking any concrete action. Demand is slower now and there is a possibility that more international suppliers would divert their cargoes to China as a result of the recent cash crunch in India that dampens demand.”