Tight supply, improved demand might drive local PVC market higher in China

Domestic PVC offers in China remains on a stable to firmer track ahead of August shipment offers announcement from major international suppliers. A large number of players has expressed bullish expectation for the near term outlook citing the start of the traditional high demand season, while supply is tightening amid low operation rates among carbide-based makers.

At the moment, offers for carbide-based PVC stands at CNY6850-6900/ton ($883-889/ton without VAT) and at CNY7200-7300/ton ($928-940/ton without VAT) for ethylene based PVC, all based on EXW China, cash equivalent.

“Tightened environmental regulations continue to cap operation rate at most carbide-based PVC plants. Demand is picking up and we hope market would remain positive in the near term,” a trader commented.

There has also been speculation that the escalated trade tension between China and the USA would discourage purchasing interest for US origin cargoes, from which buyers might seek alternative materials either from the local ground or other overseas suppliers. USA was the second largest PVC supplier to China in 2017, accounted for a total volume of more than 430,000 tons.

A carbide-based PVC producer added, “We might not have any export allocation for August as we are clearing backlog now. Production costs are rather high due to limited carbide and liquefied alkali supply, and therefore, we are unable to concede to any discount.”