- Vietnam relaxed its lockdown restrictions, except in cities and provinces with high risks
- Demand remained on a bearish tone
- Outlook is pessimistic as battle against Coronavirus persists
SSESSMENTS.COM’s pricing database showed that Vietnam PVC market has been sent into a tailspin as coronavirus continues to sweep the globe, bringing the economy to a crawl. On the week commencing April 6, a local producer applied a price reduction of VND200,000/ton ($8.5/ton) on ethylene-based PVC cargoes compared to last week as the spread of the deadly virus has sent demand for raw materials spiralling downward. From the import market, as crude oil prices remain stuck at low level, import ethylene-based PVC offers of South Korea origin have broken below $700/ton-level, available at $695/ton on LC at sight, CIF Vietnam Main Port basis. In the following week, no fresh offers available for the local market as some producers have sold out April allocation or closed offers in the week ended April 10, while import offers have mostly stayed below $700/ton-level.
Moving to the third week of April, the leading Taiwanese PVC producer announced May shipment offers to the Vietnam market. As compared to April shipment, the producer applied a hefty price reduction of $160/ton on ethylene-based PVC cargoes, with a discount of $10/ton is applicable for purchase of 500 tons and above. In the final week, a local producer has started offering cargoes for May delivery at between $180-200/ton lower than the offer level available for April delivery offers in US Dollar denomination. The offers ranged from VND16,000,000-16,400,000/ton ($681-698/ton) on cash, FD Vietnam basis and excluding 10% VAT.
Vietnam has been under countrywide partial lockdown since April 1, forbidding all non-essential travel except for work, health or emergency reasons, shutting its borders to travellers and halting non-essential economic activities. The government also set up medical checkpoints and screenings, which constricted movement of goods and workers. During a month-long nationwide lockdown, most buyers adopted a cautious stance on the back of market uncertainties amid a challenging macroeconomic environment over the pandemic crisis. Moreover, the downturn in oil prices has put major pressure on PVC prices. On April 20, US crude oil futures collapsed below US$0 per barrel for the first time in history, amid a coronavirus-induced supply glut.
Despite the ongoing lockdown, no significant supply issues were reported during the month. On April 15, Vietnam extended its lockdown for another week in cities and provinces with high risks, while lifting restrictions in other places. Hanoi, Ho Chi Minh and Da Nang, and provinces of Lao Cai, Quang Ninh, Bac Ninh, Ninh Binh, Quang Nam, Binh Thuan, Khanh Hoa, Tay Ninh and Ha Tinh will continue to be put under lockdown. On plant news, AGC Chemicals Vietnam has brought on stream its PVC plant on April 22 following a maintenance shutdown. Located in Ba Ria - Vung Tau Province, Vietnam, the plant with a capacity of 150,000 tons/year was initially expected to resume production on April 21.
Considering the downturn in the global market, Vietnamese market players foresee that the possibility of both local and import PVC prices to decrease further in the near term remain high. Despite the low case numbers, domestic demand is projected to decline further following the international market trend as most Southeast Asian countries are still fighting their respective battles against Coronavirus outbreak with differing levels of intensity.
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