Improvement Recorded At Indonesian PVC Manufacturers’ Production Rate On Transition From Large-scale Social Restrictions Into ‘’New Normal’’
- Price movement on local PVC offers are in line with international market
- Government projects to cushion PVC demand for the remaining of 2020
- Expect for roll-over for pricing outlook
Players are still being cautious amid PVC price movements recorded in the Indonesia market. Converters reported that the leading Indonesian PVC producer has announced the latest offers with an increment of $90/ton compared to last month’s level. The latest ethylene-based PVC cargoes from the producer can be found at $860/ton on cash, FD basis and excluding 10% VAT. In the meantime, another local PVC producer told SSESSMENTS.COM that offers are also available between $850-890/ton, $90/ton higher than June offers. The second producer noted that the currency exchange should be around IDR14,500-per US Dollar but most deals last-week were concluded with an exchange rate of between IDR14,100-14,200. On traders end, offers for local PVC cargoes are at $900/ton, also up by $90/ton compared to offers from last month. According to market sources, traders are willing to give discounts of up to $40/ton if deals are concluded at least 1000 tons or above. From the import market, at time of publication, no fresh import offers have been reported yet. In the week commencing July 6, traders voiced out sell idea above $900/ton for acetylene-based PVC from China.
According to market players, PVC demand has improved in line with the increases in production rate. In the previous month, the production rate was at 15% and now reported up to 50%. This increase, however, is treated cautiously by converters because finished product demand still remains slow on their side. One of the Indonesian PVC producers pointed out, even though the price is on an uptrend, buyers continue to procure on a need basis or to meet their backlog in May. Furthermore, market players shared to SSESSMENTS.COM that the main support of demand improvement comes from the retail market, while private and government projects are yet to make an impact on PVC. Market players said that government projects should start running in August until the end of 2020. Despite the pandemic and strain on government’s budget, market participants said construction projects will go on as the government has allocated some budget, therefore for the remaining of the year, end products demand for the construction sector is expected to remain healthy. From the production side, market talks said that Indonesia’s Asahimas Chemical has yet to resume the operation at the company's VCM plant no.2. The plant with a capacity of 350,000 tons/year has been shut previously for about one month for turnaround maintenance. Upon completion of maintenance on VCM plant no.2, the producer will continue turnaround maintenance at VCM plant no.1 for one month. For the time being, PVC supply is still ample even though many manufacturers have restarted their activities after previously shutting down due to mass-scale social distancing and Eid Al-Fitr holiday.
For the price outlook, market players shared to SSESSMENTS.COM that under the current circumstances, a rollover can be expected in the weeks to come. They reasoned that higher prices won't get a good response from the market, while lower prices will be difficult for the producers since the production cost is still very high, taking into account VCM and ethylene prices.
