A trader based in India shared with SSESSMENTS.COM that the leading Taiwanese PVC producer is currently holding inventory for the next two months. High-level stocks at the leading PVC producer’s side indicate that many producers might also have large cargoes because production does not stop despite the slow sales due to the COVID-19 outbreak. The trader also said to SSESSMENTS.COM there are zero deals reported from the India PVC market. For May shipment, the leading Taiwanese PVC producer has no offers to the India market, but the producer will consider bids from customers, if any. Yet, no bids were received as buyers are affected by lockdown. India is still in a lockdown which would have ended on April 15, but got extended to May 3. Lockdown in India requires the closure of all factories, stopping public transportation, and outside activities to cease.
The trader has also talked to a US PVC producer who said that production from their end is reduced by 20% of normal capacity due to lack of storage. However, the producer is not in cash flow trouble even though the PVC offers from their end have reached a lower limit, $500/ton on FOB USA basis. The source then pointed out to SSESSMENTS.COM that it is essential to understand how much inventory each producer is holding at the moment in order to project PVC prices in the future, whether prices would plunge to the bottom or make an upturn.
Concern that the Indian economy will not be able to bear the impact of the lockdown for longer makes the government under Narendra Modi make adjustments. SSESSMENTS.COM noted that the government has divided zones where zones that are not/slightly affected by coronavirus can start carrying out limited economic activity from the 3rd week of April.
The trader stated that some major PVC manufacturers have started to run their plants at a reduced rate since the end of the first lockdown phase. There is an expectation that all of the Indian PVC producers are pushing themselves to operate on the basis as an essential part of the agriculture supply chain, which is not affected by lockdown.
The trader also estimates that when PVC manufacturers are all running, inventory of raw materials at producers and traders’ ends will be sufficient. According to data compiled by traders and shared to SSESSMENTS.COM, India's manufacturers overall PVC resin stock is currently at 60,000 tons and can reach 90,000 tons by early May. The trader also acknowledged that the leading Indian PVC producer had exported 10,000 tons of PVC cargoes to China at a price slightly above $600/ton. While in the local market, the leading Indian producer has lowered their PVC offers to $725/ton in USD denomination, although there is no response from buyers due to the absence of movement of goods throughout India.
From the same data, the stock owned by traders this week is at 75,000 tons with expectations that it will reach 250,000 tons in early May following a slow delivery because it was hampered by lockdowns. With these abundant stocks, India is expected to only purchase from the import market at normal levels within 2-5 months from now. Additionally, India is on the edge of monsoon and domestic demand is projected to decline up to 20% YoY, SSESSMENTS.COM was told.
According to the trader, in exceptional conditions like COVID-19, traders need to be proactive and willing to listen to anticipate trade risks while maintaining good relationships between every party of PVC industries. “When conditions return to normal, India overall has a strong domestic demand and lower crude and commodity prices will eventually spur demand and domestic consumption,” said the trader.
Click below to view related stories and content on PVC:
NewsSSESSMENTS: Leading Taiwanese PVC Producer Announces May Shipment Offers
NewsSSESSMENTS: Leading Indian PVC Producer Revises Prices On April 16
