- Local and import PVC offers moved in tandem during June
- A slight improvement in PVC demand was seen in the week commencing June 8
- August delivery offers expected to increase further
On the week starting June 1, SSESSMENTS.COM noted that June delivery offers from one of the Indonesian PVC producers have emerged with an increment of $40/ton compared to May delivery offers. Meanwhile, other Indonesian PVC producers just announced their June delivery offers in the following week or after the leading Taiwanese PVC producer announced July shipment offers. Following the leading Taiwanese PVC producer’s pricing strategy, other Indonesian PVC producers initiated a price increase of $40/ton on June delivery offers in USD denomination as compared to May. Some converters managed to secure deals at $840/ton on 45 days credit terms, FD Indonesia basis and excluding 10% VAT for small quantities of purchases. Moving to the week commencing June 22, the majority of Indonesian PVC producers already closed orders for June delivery, on the other side, buyers were waiting for July delivery offers.
In the import market, July shipment offers from the leading Taiwanese PVC producer surfaced with a remarkable increase of $90/ton compared to June shipment, captured at $790/ton on LC at sight, CIF Southeast Asia Main Port basis with a discount of $10/ton was applicable for purchases of 500 tons and above to all markets. In the second week of June, some deals for Thai PVC cargoes for July shipment captured at a high level, at $840/ton on LC at sight, CIF Indonesia Main Port basis. In late June, SSESSMENTS.COM’s data showed that import offers for PVC cargoes of Thailand origin were available at the same level to the deals concluded in the second week. At that time, since such a level was already labelled as high, some traders were contemplating whether to take the cargoes or not.
In early June, SSESSMENTS.COM was told that demand in Indonesia was slow as most businesses just returned to the market after the Eid Al-Fitr holiday. Then, on the week commencing June 8, Indonesian PVC market saw a slight improvement in demand from the prior week as the market has fully resumed from Eid Al-Fitr holiday. However, the overall situation was still below the expectations since the Coronavirus-related lockdown restrictions took a firm hold over the nation, grounding the economy to a standstill. Even after the government implemented a “new normal” policy with more relaxed measures for industries in several big cities in Indonesia starting from the second week of June, domestic demand has yet to show further improvement. During June, most converters were still running production at a reduced capacity, around 50-80% from the normal output, while some factories were forced to halt the production due to slow demand for finished products. In general, demand for PVC resins in Indonesia reported sluggish throughout June.
On plant news, on June 16, Indonesia’s Standard Toyo Polymer reportedly resumed production at its PVC plant. Previously, the plant with a capacity of 82,000 tons/year was shut for maintenance purposes on May 27. Meanwhile, market talks have it that Sulfindo Adiusaha had experienced an unplanned shutdown at its 95,000 tons/year PVC plant on the week starting June 15. By the week commencing June 29, the plant was already running normally. Upstream, SSESSMENTS.COM was told that Indonesia’s Asahimas Chemical (ASC) will resume production at its 350,000 tons/year VCM plant no.2 by early July after previously being shut for one month for turnaround maintenance.
Looking into July, Indonesian market players opined to SSESSMENTS.COM that the demand would gradually improve as players are gaining more confidence supported by the “new normal” policy. As such, there is a chance for August shipment offers to increase between $10-20/ton, buoyed by the increases in the upstream market. The current VCM price reached $650/ton supported by the firm crude oil as well as ethylene prices. Compared to a month ago, the VCM price on CIF Asia was below $600/ton-threshold level. Moreover, there is a possibility of reduced allocation from the leading Taiwanese producer due to the upcoming turnaround maintenance at their plants.
