Asian PVC sellers seek further increases in 2009

In China, traders have reported receiving initial February offers for Korean and Thai PVC at prices $40-70/ton above the January done deal levels for Asian PVC in China. Initial February offers for Korean PVC were reported at $680/ton CFR CMP, while initial offers for Thai PVC stand at $700/ton with the same terms. Traders stated that rising VCM and crude oil costs as well as relatively high domestic prices in China have been cited by producers as the main reasons for their price hike targets. Producers are also said to be feeling increasingly optimistic regarding their February business after they had settled their January business with increases of $60/ton when compared with their December done deal levels, while also reporting an up-tick in January sales as compared with December sales.

In Southeast Asia, sellers are also reported to be seeking higher prices for their early 2009 business. In Vietnam, two domestic producers reported announcing increases ranging from $40-80/ton on their domestic offers for January in the final days before the New Year holiday, with one producer announcing their January offers at $670-690/ton FD Vietnam and another announcing their offers at $690-700/ton with the same terms. Sources at the producers cited firming demand inside the country as well as their lack of sales pressure as the main reason for their price hike targets, although some sources at the companies were skeptical that the producers would be able to achieve the full extent of their price hike targets as overall demand is expected to remain depressed in the first few months of 2009.

Meanwhile, a source at an Indonesian producer reported that the company announced an increase of $50/ton on their January offers for PVC k67-68 and k70, with their offers for both products currently standing at $630-650/ton CIF Malaysia/Singapore. The source attributed the company’s price hikes to rising ethylene feedstock costs, adding that they are feeling confident that they will be able to conclude deals at their new offer levels in the weeks ahead.

However, not all news from the region has been bullish, with many players questioning the feasibility of further price increases given the poor economic environment generated by the global financial crisis. Furthermore, some buyers stated that PVC demand may be hit relatively harder than demand for other polymers because of its heavy use in the construction sector, which is among the hardest hit sectors of the economy in the recent financial turmoil.

In China, domestic prices moved down in the final days before the holidays as sellers cut their offers in order to entice greater buying interest. Last week, prices for domestic acetylene based PVC in China fell CNY50-200/ton ($7-29/ton) on a week over week basis, while offers for ethylene based PVC lost CNY100/ton ($15/ton) over the same period. In spite of these price cuts, domestic PVC prices in China continue to be higher than import offers, even after customs and anti-dumping duties are taken into account.

Meanwhile, a source at a Malaysian producer reported that the company cut their offers for PVC k64-65 by MYR100-150/ton ($29-43/ton) in the week immediately preceding the holidays, attributing their price cuts to the fact that they had been unable to conclude any deals at their previous price levels. Given persistently poor demand and instability in the crude oil market, the source stated that PVC prices were unlikely to increase over the short term.

Source: ChemOrbis