Local PVC prices in China softened despite tightened supply

Chinese players returned from the Dragon Boat Festival finding local PVC prices drop for two weeks in a row on fading effect of firming futures market and persistent weak demand. In fact, it is reported that local carbide and ethylene based PVC offers drop another CNY100-200/ton ($15-29/ton) this week in spite of tight availability sue to production restriction.

As reported in the earlier week, Tianjin Dagu Chemical Co Ltd was forced to cut operation rate to below 50% on environmental restriction. The plant might need to run at low rate for about 20 days affected supply for ethylene based PVC.

A trader said, “Yet, we are seeing a rather balanced condition as many converters are also shutdown due to environmental issues. It supposed to be the traditional high demand season now, but market seems so depressed.”

Another market source added, “There are so much of uncertainties at the moment, however we think the outlook might not be so bright, especially with India entering the monsoon season and several major Southeast Asian markets are celebrating Ramadan. Pressure on local China market might therefore exacerbate in the coming weeks.”

Domestic PVC offers currently stand at CNY5900/ton ($742/ton without VAT) for carbide based and CNY6300/ton ($792/ton without VAT) for ethylene based, all based on EXW China, cash term.