- China PVC market was slow at the beginning of the quarter
- Supply was reported tight in May and June
- Xinjiang Zhongtai Chemical delayed maintenance shutdown initially scheduled in May to August
SSESSMENTS.COM noted that local offers for both acetylene-based and ethylene-based PVC in China during Q2 of 2020 were mostly on an uptrend. The decrements were only seen in the first and last week of April, then in the last week of June. In the first week of the quarter, local acetylene-based PVC offers were available at CNY4,900/ton ($693/ton) on cash, EXW China basis and including 10% VAT. In this particular week, acetylene-based PVC offers were corrected down by CNY200/ton ($28/ton) compared to offers available at the end of Q1 due to unsupportive demand and high inventory pressure faced by some producers. In the last week of April, offers for acetylene-based and ethylene-based PVC decreased between CNY50-100/ton ($7-14/ton) on a weekly comparison due to competitive localized ethylene-based PVC offers. Throughout May, local ethylene-based and acetylene-based PVC offers were on an uptrend owing to firmer futures prices, limited supply, and healthy demand. The uptrend in acetylene-based and ethylene-based PVC offers sustained until the third week of June. In the last week of the month, offers for acetylene-based PVC were adjusted down between CNY50-100/ton ($7-14/ton) on a weekly comparison following softer futures prices. As for local ethylene-based PVC, offers were stable compared to the same period. By the end of the Q2 of 2020, local acetylene-based PVC offers were above CNY6,000/ton-level ($848/ton) whereas some local ethylene-based PVC offers were already at CNY7,000/ton-level ($990/ton).
For export, offers for acetylene-based PVC were between $680-710/ton on LC at sight, FOB China basis in April. The offers increased for three consecutive weeks in May. In June, some Chinese PVC producers maintained stable export offers on a weekly comparison while others opted to skip offering due to buyers’ resistance to high offers. In the last week of June, market players reported to SSESSMENTS.COM that export offers for acetylene-based PVC already stood at $830/ton with the same payment and delivery terms. For import ethylene-based PVC cargoes, significant downward adjustments were applied on May shipment offers. The leading Taiwanesse PVC producer decreased offers by $160/ton compared to April. Adjustments of the same amount were also applied by a Japanese PVC producer.
On May 19, the leading Taiwanese PVC producer increased offers for June shipment by $40/ton from May shipment to $700/ton on LC at sight CIF China main port basis. Offers from a South Korean producer were also at the same level when the producer firstly announced the offers on May 20. SSESSMENTS.COM was informed that the producer applied an increase of $10/ton a day later due to satisfactory sales. For July shipment, the offers increased further remarkably. Offers from the leading Taiwanese PVC producer increased by $90/ton. Meanwhile, offers from Japanese PVC producers and a South Korean PVC producer went up by $100/ton between $90-120/ton, respectively. Changes on offers for July shipment were compared to June shipment.
China PVC market was slow at the beginning of the quarter. Most converters reported only running the production between 50-60% from the normal rate as demand for the end products, especially from the export market were slow due to the Coronavirus outbreak. In May, demand for PVC was healthy since demand for end products gradually improved, particularly for PVC pipe supported by the real estate and infrastructure projects. Such a condition remained seen until the first half of June. In the second half of June, PVC demand weakened as converters had finished stock replenishments and most were away for holiday due to the Dragon Boat Festival holiday, which was celebrated from June 25 until June 27. On the supply side, the availability of acetylene-based PVC in May and June was limited due to maintenance at some producers’ plants. Likewise, the supply for ethylene-based PVC in the same time frame was also tight due to satisfactory sales. In the production sector, Xinjiang Tianye (Group) Co Ltd shut the company’s 1.4 million tons/year PVC plant for maintenance that was scheduled to last for 20 days on May 7. Tangshan Sanyou International Industry Co Ltd reportedly conducted maintenance at the company’s 400,000 tons/year PVC plant for 14 days starting from June 9. SSESSMENTS.COM was also told that Xinjiang Zhongtai Chemical initially scheduled to conduct maintenance at the company’s PVC plant with a capacity of 1,100,000 tons/year in May, but then delayed to August.
Looking into the Q3 of 2020, market players opined to SSESSMENTS.COM that there might be some downward corrections on both local acetylene-based and ethylene-based PVC offers. However, the adjustment will not be significant as supply will remain tight. Pertaining to demand, market players mentioned that PVC demand in China is expected to soften as traditionally, July to August is a low season for PVC in China.
