Chinese players: Local PVC market sees sign of stabilisation

Domestic PVC market in China has been constantly following the soft trend after players returned from the Lunar New Year holidays due to persistent weak demand and high inventory levels. Compared to the peak the market recorded during February, both ethylene and carbide based PVC in domestic China has plunged approximate $140/ton, according to CommoPlast data.

However, this week, local sellers are attempting to introduce CNY50/ton ($7/ton) hike on both ethylene and carbide based PVC after prices hit multi months low levels following the reduction in import ground.

A trader commented, “We see some interest from market this week though most deals we concluded are at the lower end of the overall price range. With Indian buyers return with strong appetite, we think market might be nearing the bottom now.”

Couple of producers, who have not implemented any price increment this week but holding firm on their cargoes, refusing to give additional discount. A carbide based PVC producer said, “Operating rate among Chinese makers shall reduce as summer is approaching. Though purchasing activities are still weaker than expected, we prefer to hold our prices stable to monitor further development. In addition, our offers are already at the CNY5600/ton ($695/ton without VAT), which is very competitive.”

There is strong hope that healthy demand in India this month could support the general sentiment across Asia region and with Taiwanese major sold out May shipment allocation, pressure might reduce in the coming month. Chinese converters, however, are questioning the sustainability of the stabilizing trend claiming that government’s renewed effort to crack down on non-compliance with environmental regulation has affected demand. Hope for a more balance supply-demand market depend on how severe local PVC producers cut operating rate in line with the summer season.