SEA and China players: April offers for PVC might increase on small scale

As demand in India recover from the recent cash crisis, international PVC suppliers have been lifting their offers to reflect the improved buying interest. Initial expectation for April delivery shipment from a major Taiwanese producer called for at least $40/ton increased from March; yet Chinese and Southeast Asian players are not optimistic about the acceptance in these markets considering the current state of demand.

In fact, most market within Southeast Asia including Malaysia, Indonesia and Thailand are reporting weaker than expected restocking activities and near term prospect appears to be less bullish. As a result, several regional and overseas suppliers have not been able to achieve full hike target for March shipment. In fact, buyers in Malaysia reported receiving discounts of $10/ton from initial prices for both Thailand and Indonesia PVC cargoes on the back of stiff buyer resistance. A pipe and profiles manufacturer in Malaysia commented, “Even carbide based PVC supplier has stepped back on their offers by up to $30/ton and we purchased some cargoes at $870/ton CIF Malaysia this week.”

Meanwhile, in China, inventory accumulated unexpectedly high in the post Lunar New Year holiday period and constant softening futures trade has casted additional pressure on the spot market. It is reported that the on going environmental compliance inspection in the northern China area has forced a number of small to medium size converters to shutdown due to outdated wastage disposal system. This might further dampen market sentiment in the near term, sources said. “However, we do hope improved demand during March-April period in other areas could balance up the condition. Firm stance from Taiwanese major would also support the general sentiment.”

For this reason, players in Southeast Asia and China are expecting smaller hike for April shipment despite strong demand in region’s largest PVC importer – India. “We are not expecting any discount from the Taiwanese major given the upstream costs at the moment. However, a $40/ton month on month increase might only applicable to India market, for SEA and China, we think the hike target would be smaller,” a market source commented.