Local China PVC market surge to multi-month highs on costs and supply concern

The soft sentiment in overseas markets has not affected the local PVC ground in China over the past couple of weeks. Domestic prices continue firming up for three weeks in a row thanks to tightened supply and bright demand prospect in the near term. And yet, Chinese buyers are caught in surprise this week as larger than expected hike emerges.

Carbide based PVC rose CNY200-400/ton ($31-63/ton)from last week to CNY7050-7250/ton ($954-981/ton without VAT), while ethylene-based PVC jumped CNY300/ton ($47/ton) to CNY7400/ton ($1001/ton without VAT), all based on EXW China, cash equivalent.

The market started showing stiff resistance after the latest prices adjustment, however, there is no indication from supplier side regarding potential step back. “Supply is very tight due to a number of plant shutdown. Demand might continue to improve in the near term and therefore, we are optimistic about the outlook,” a trader said.

“It becomes more difficult to attract deals at prices above the CNY7000/ton ($948/ton without VAT) threshold for carbide-based PVC, however, production costs are high due to the stringent environmental regulation and therefore, our customers only procure materials hand to mouth basis,” a carbide-based producer informed.

Several traders have expressed the intention to implement another CNY100/ton ($16/ton) increased on ethylene-based PVC in the coming days with an expectation that buyers would have no choice but to procure materials to ensure undisrupted production. “Demand for pipe shall remain strong thanks to the government’s heavy effort in pushing for public infrastructure projects. This might support local ground even major overseas markets are entering the off-peak season,” a trader said. The source added that export window is now very narrow and that Chinese suppliers might focus more on the local ground in the coming weeks.