Supply Condition In China To Alleviate Demand Alteration Effect On PVC Pricing Outlook
- Local PVC offers move in different directions
- PVC demand in China started to soften
- Local PVC prices predicted to decrease within a limited range
Market sources opined to SSESSMENTS.COM that the supply condition in China will alleviate demand alteration effect on PVC pricing outlook. Following the decreases in the futures market, local offers for acetylene-based PVC were also down between CNY50-100/ton ($7-14/ton) on week-on-week comparison. However, a local acetylene-based PVC producer is keeping this week’s offers stable as the company already made downward adjustments of CNY50/ton ($7/ton) since last Friday. While for local ethylene-based PVC cargoes, the offers were kept stable on a weekly comparison due to no inventory pressure. From the import market, July shipment offers for ethylene-based PVC from a South Korean producer increased by $120/ton from June shipment but no deal concluded yet as the offers deemed too high. While to the export market, Chinese suppliers have yet to announce new offers citing it will most likely be deemed unworkable. Meanwhile, some sellers voiced out sell idea for acetylene-based PVC cargoes at $800/ton on LC at sight, FOB China basis.
Although PVC demand in China is still considered healthy, market sources reported to SSESSMENTS.COM that the demand has been showing signs of waning as buyers already have sufficient inventory stemming from the replenishment activity done in the previous weeks. As such, buyers are showing resistance towards the high prices and the buying sentiment is weakened. On the supply side, the coastal inventory of acetylene-based PVC recorded at 288,800 tons as of Monday morning (June 22), a reduction of 4,000 tons from last week. Although the total inventory is declining, sources noted that the inventory level in East and South China is moving in contrast. In East China, the inventory decreased by 4,500 tons and stood at 218,300 tons. While in South China, the inventory recorded at 70,500 tons, an increase of 500 tons because of buyers’ resistance towards high prices in South China is more prominent.
Looking ahead, market sources expressed an opinion to SSESSMENTS.COM on the possibility for local PVC prices to decrease further following the decline in demand due to hot weather. However, the decrement will be limited as supply is still relatively tight.
