Tosoh lowers July Asia VCM offer by $70/t

07 July 2008 09:23  [Source: ICIS news]

SINGAPORE (ICIS news)--Japan’s largest vinyl chloride monomer (VCM) producer, Tosoh, has lowered its offer for July cargoes by $70/tonne on subdued demand from Chinese buyers, market sources said on Monday.

The company’s offer now stands at $1,030/tonne CFR (cost and freight) China compared to its June settlement level of $980/tonne, sources said.  Counter-bids are at mid-$900s/tonne to $1,000/tonne CFR China, traders added.

Negotiations for July cargoes are now in their third week, which is a reflection of the wide gap between the initial buying and selling ideas in the market, industry sources said.

VCM producers said they had to hike their offers due to surging feedstock costs and rising downstream values. Spot prices of ethylene, a key feedstock for VCM, are now at a 16-year high , rising by more than $100/tonne on a CFR northeast (NE) Asia basis in the past month, according to global chemical market intelligence service ICIS pricing.

Polyvinyl chloride (PVC) producers in northeast Asia had meanwhile raised their offers for July cargoes by $50/tonne over the previous month on the back of rising domestic PVC values in China. Asian PVC prices last week were assessed at $1,230-1,260/tonne CFR China Main Port (CMP).

VCM buyers have, however, put up stiff resistance to the price hikes, citing bearish sentiments. Chinese PVC producers are also increasingly turning to ethylene dichloride (EDC) rather than VCM because of the attractive price gap, traders said.

It costs around $300 to convert one tonne of EDC to one tonne of VCM, traders said. EDC prices were last week assessed at $475-505/tonne CFR NE Asia.

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

For more on PVC, VCM, EDC visit ICIS chemical intelligence 
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By: Ng Hun Wei
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