Indian PVC Market Dipped Going Into Traditional Low Season
- Slight price movement on localized cargoes
- Several factors causing demand to be sluggish
- Maintenance shutdown reported at local and foreign PVC producers’ plants
The market activity started to dip going into the traditional low season of PVC demand in India. Pipe manufacturers based in Bengaluru informed SSESSMENTS.COM that offers from the leading Indian PVC producer are stable from last week with deals finalized at the initial level INR73,000/ton ($968/ton) on FD basis and excluding 18% GST. For localized cargoes, a trader reveals that offers for cargoes of South Korea, Taiwan, and Thailand origin are stable from last week at INR71,000/ton ($942/ton) EXW Mumbai and excluding 18% GST. Meanwhile, on EXW Nhava Sheva, localized Taiwanese cargoes recorded down by INR1,000 ($13/ton) from last week’s level, now available between INR72,000-73,000/ton ($955-968/ton). A downtrend can be attributed to softer demand, coupled with stronger exchange rate between Rupee and Dollar. From the import market, the trader receives offers for US cargoes in the range between $780-800/ton on LC 90 Days term, while on LC at sight term, cargoes are available at $800/ton with shipments in July.
SSESSMENTS.COM noted sluggishness continues in the India PVC market this week with deals only coming from the agriculture sector. However, with a reduced volume of 10% from last week. There are some reasons leading to this situation according to market players, such as the lack of manpower in the construction sector thus hampering PVC absorption, high number of COVID-19 cases which triggered restriction movement in some areas, and monsoon already descended around India. Although demand for pipe agriculture right now is slowing down, most pipe manufacturers still run at a reasonable rate to build up the inventory. Speaking about lockdown in Chennai, cargoes previously held at Chennai port can move immediately upon returning workers to help load/unload materials after lockdown relaxation from June 30. In the production sector, Finolex informed that the company continues to shut one of its PVC plants with a capacity of 135,000 tons/year in Ratnagiri amid monsoon after previously being closed since March due to lockdown. Formosa Plastics Corporation whose products become a benchmark for imports to India also announced upcoming maintenance at its plants with an annual capacity of 500,000 tons from mid-August until early September. However, the producer said this would not affect the August allocation very significantly.
In terms of outlook, market players commented that local producers will follow the same price trend announced by the leading Taiwanese PVC producer before making any price correction as they do not have inventory pressure. With end-product demand slowing down, most players voiced out their expectation to SSESSMENTS.COM that the price should be lower in the local as well as import market to stimulate better sentiments.
