India PVC up after 2-month slide on demand

22 November 2007 04:54  [Source: ICIS news]

SINGAPORE (ICIS news)--Indian polyvinyl chloride (PVC) prices are recovering from a steep slide which started in mid-September, driven by strengthening demand and declining inventories, suppliers, traders and end users said on Thursday.

“The Indian PVC market seems to have bottomed out, and buyers have realised that suppliers are unlikely to lower their offers,” a supplier said.

Deals were heard at $1,000-1,120/tonne CFR (cost and freight) India this week, up from the $970-980/tonne levels heard in the last two weeks.  A South Korean supplier said it had hiked offers to $1,030/tonne but had yet to seal any deals.

Also boosting sentiment was the surge in crude values to a record of above $99/bbl this week. “This has had a psychological effect on end users, signalling that lower PVC prices will no longer be sustainable,” a trader said.

Demand from the construction segment had begun to strengthen with the end of a prolonged monsoon season, an end user said. “This year, the peak season has been somewhat delayed, but we are seeing an improvement in demand now,” he said.

Buying activity picked up in the domestic market too, with producers saying they were receiving a large number of enquiries this week from end users whose inventories had touched rock bottom.

The improved sentiment prompted Indian producers to withdraw the price protection they had offered to buyers in October assuring them of compensation in case prices fell.

Trade had been lacklustre in October, despite a 6% or Indian rupees (Rs) 3/kg reduction in domestic prices to counter the dampening effect of the strengthening rupee.

A South Korean supplier said it had sold very limited volumes into India for December and could not cash in on the strengthening sentiment as it was already sold out.

A second Korean supplier said it had diverted Indian allocations to more lucrative destinations such as Africa and South America.

“We thought there was no point engaging in a tussle with Indian customers who had been offering tremendous price resistance in late October and early November,” the supplier said.

Major PVC producers in India include Reliance Industries, Finolex Industries and Chemplast Sanmar.

($1 = Rs39.29)

By: Prema Viswanathan
+65 6780 4359

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