MonthlySSESSMENTS: July China PVC Prices


  • Domestic and export offers move in line with the futures market

  • Unresolved US-China trade truce and hot weather dragged down PVC demand

  • Factories in the South China market reduced the operating rates

In the week commencing July 1, China saw an overall increase in the acetylene-based and ethylene-based PVC market. During the period, domestic acetylene-based prices climbed up between CNY50-100/ton ($7.2-14.4/ton), while local offers for ethylene-based PVC up by CNY50-150/ton ($7.2-21.6/ton) compared to last week of June in line with the upward momentum on the PVC futures market on the back of US and China agreement to postpone additional tariff on remaining Chinese goods worth $300 billion. During the week, September 2019 PVC futures on the Dalian Commodity Exchange have breached CNY7,000/ton ($1,008/ton) threshold. In the following week, offers for domestic acetylene and ethylene-based PVC remain unchanged from the prior week. Based on the current local prices, sources in the market reported to SSESSMENTS that export offers are deemed not feasible as the offers on FOB basis around $900/ton on LC at sight would be difficult to conclude a deal.

No corrections were recorded in the third week as most local producers prefer to wait for the fresh price list from the leading Taiwanese PVC producer before making any price adjustment. At the same time, SSESSMENTS was informed that PVC prices in the China export market recorded between CNY200-300/ton ($28.8-43.2/ton) lower than the domestic market, hence most producers prefer to move the cargoes in the local market. In the week ending July 26, there are no significant changes captured in local PVC prices as the market was stuck between softer demand and reduced supply. Contrastingly, domestic offers for both ethylene-based and acetylene-based PVC surfaced with a reduction between CNY50-100/ton ($7.2-14.4/ton) in the week commencing July 29. During the week, selling to the export market remains unfeasible for Chinese producers as export offers on FOB China basis should be around $870/ton or higher based on domestic offers, which is deemed too high by overseas customers.

For the import market, the leading Taiwanese PVC producer announced August shipment offers for ethylene-based PVC with a reduction of $30/ton and a volume discount of $10/ton was applicable for purchases at 500 tons and above. Similarly, August shipment offers from one of the Japanese PVC producers declined by $40/ton with the total allocation of around 5,000 tons to China market. All offers compared to July shipment’s level, market sources reported to SSESSMENTS.

In general, unresolved trade friction between US-China and hot weather have contributed to the weak demand for PVC resins in the China market during July. National Meteorological Centre reported that China is still in grip of withering heatwave even though rain is on the way. In the midst of summer season, market participants in China mentioned to SSESSMENTS that most local producers traditionally reduce their operating rates to prevent any industrial calamities and to cut operating cost due to a spike in demand for electricity to run air conditioning units. Further added by sources, hot weather mostly affects the upstream factories more significantly than the downstream factories. On the supply side, China’s PVC market stood at 315,000 tons in the first week of July, captured at 7,000 tons higher compared to the level at the end of June. In the week commencing July 22, market inventory for PVC stood at 300,000 tons, a reduction of 8,000 tons compared to inventory level in the week commencing July 15 as market talks have it that some factories in the South China market have reduced the operating rates on the basis of hot weather.

Entering August, market participants in China have mixed opinions on PVC prices trend in the market. Some opined to SSESSMENTS that domestic prices would remain stable, while others believed that downward correction between CNY100-150/ton ($14.4-21.6/ton) might be applied depending on the futures market movement by that time.

Tags: Asia Pacific,China,English,EN PVC China MSS,MonthlySSESSMENTS,Northeast Asia,Polyvinyl Chloride (PVC) China PVC Prices,PVC prices

August 5, 2019 5:15 PM