- India market mostly muted in April amid month-long lockdown
- Some imported cargoes shipment for April was cancelled because of logistic and payment issues
- Outlook for May looking glum considering monsoon are coming, demand expected to decline by 20%
In the first week of April, SSESSMENTS.COM noted no transaction reported from India’s PVC market as a result of the nationwide lockdown. In order to curb the fast-spreading Coronavirus outbreak, the government has imposed the nationwide lockdown until mid of April and later extended it to May 3. The week commencing April 6, the Indian leading PVC producer sold materials to domestic converters producing essential products. In the import market, some players informed that a South Korean PVC producer decreased the offers between $30-40/ton as compared to the initial offers for April shipment. The offers stood between $810-820/ton on LC 90 days, CIF India main port basis. However, buyers remain festered since the market was muted.
Third week of April, leading Taiwanese PVC producers were rumored to skip May shipment offers to the country due to the extended lockdown, which was later confirmed in the company’s May announcement shipment offers. On the week commencing April 20, the leading Indian PVC producer announced a price protection on polyvinyl chloride (PVC) in a bid to improve domestic sales. At that moment, local prices had retreated to below INR70,000/ton-level, available at INR68,000/ton ($894/ton) on cash, EXW Kolkata basis and excluding 18% GST. For localized cargoes, a trader disclosed to SSESSMENTS.COM that the company was offered Taiwanese origin cargoes between INR66,000-67,000/ton ($868-881/ton) on EXW Mumbai basis. In the domestic market, offers for localized Central Asia, Far East Asia, and Southeast Asia cargoes are positioned below INR70,000/ton-threshold level, ranged between INR61,500-66,000/ton ($804-863/ton) on cash, EXW Delhi basis and excluding 18% GST. In the final week of April, some suppliers have yet to announce fresh offers to the India market as trading activities were winding down since most downstream factories in the country were forced to halt production until further notice during a-month-long nationwide lockdown.
From the import market, some foreign suppliers reportedly received order cancellations from customers on the back of the shipment disruption amid Coronavirus lockdown. The cargoes that are already at the ports also cannot be unloaded as only specific personnel related to essential services are allowed to work at the port. Additionally, a local trader reported to SSESSMENTS.COM on order cancellation for April shipment due to payment issues. During lockdown, bank operations are limited and LC was unable to be opened, thus, payment cannot be made. For US origin cargoes, the import prices touched a new low of $600/ton mid-April, trailing China prices. Some customers received offers for US origin cargoes at $550/ton on LC 90 days, FOB Houston basis. Considering the current $400/ton-level VCM price, sources in India opined that the lowest import prices should be around $550/ton with the same payment and delivery terms. With the current VCM prices and high inventory on traders and producers hand, some sources pointed out that selling price for May shipment offers to India market should be below $700/ton-level, around $600-620/ton on CIF basis. These levels were seen towards the end of the month for Russian cargoes, offered between $600-625/ton with deals concluded at $600/ton on CIF terms.
On the production sector, due to the lockdown, some Indian PVC producers have shut their PVC plants and congestion at the ports persists as the force majeure has been declared by 12 ports that are run by the government. SSESSMENTS.COM was told that Reliance Industries Limited only has one PVC line that was still running during the lockdown, the plant with a capacity of 335,000 tons/year located in Dahej, Gujarat, India, and mostly producing to fulfill local market for essential necessities. Most pipe manufacturers have been trying to apply with the authorities to get necessary permits to resume operations, but most have not been able to get approval. Amid a one-month lockdown, manufacturers in India have been forced to cease their production, while some major PVC Film manufacturers are still running the production. As the pandemic paralyzed economic activity in India, most traders and producers were having high inventory pressure.
On the supply side, SSESSMENTS.COM was informed that as the demand is sluggish and the country on lockdown, shipment disruption was reported throughout the month. High inventory was also reported by traders and producers since downstream converters cannot absorb the supply as a result of temporary shut down production during lockdowns.
Indian market players displaying their concern to SSESSMENTS.COM as the outlook for May are looking somewhat glum. Confidence in the Indian economy is fading as the country has considered losing in tackling the Coronavirus crisis, as the outbreak persisted for over 3 months. Most converters are withholding their cargo purchase as slow macroeconomic conditions and outbreak continue to damage market sentiment. As India is also on the edge of monsoon, domestic demand is projected to decrease further by as much as 20%.
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