Tosoh yet to settle Asia June VCM

29 May 2008 07:39  [Source: ICIS news]

SINGAPORE (ICIS news)--Japan’s largest vinyl chloride monomer (VCM) producer Tosoh Corp has yet to settle its benchmark June cargoes despite lowering its initial offer price by $40/tonne, a source close to the company said on Thursday.

The company offered $1,020/tonne CFR (cost and freight) China for June cargoes around two weeks ago and revised its offer to $980/tonne last week. Counter-bids however were at $940-950/tonne, lower than May’s settlement level of $960/tonne.

“A $20/tonne increase (in VCM prices) should be acceptable given that PVC prices were also up by $20-30/tonne but buyers are just not willing to pay such levels,” the source said.

Taiwan’s Formosa Plastics Corp (FPC) earlier this month hiked its benchmark polyvinyl chloride (PVC) offer for June shipments by $30/tonne over May to $1,200/tonne CFR China.

As Tosoh will close its offers for June VCM cargoes this week, it might not sell any VCM spot cargoes to China in June if the bids remained unattractive, the source said.

The company can afford to do so as its main chlor-alkali complex in Nanyo would be shut down for maintenance and expansion works in June.

VCM producers and traders attributed the low buying interest in the market to bearish sentiment among buyers as well as the competitive prices of ethylene dichloride (EDC), another feedstock used in the PVC production process.

Tosoh is Japan’s largest VCM producer with a total capacity of 1.45m tonnes/year.

($1 = €0.64)

By: Hun Wei Ng
+65 6780 4359

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