20 April 2009 11:14 [Source: ICIS news]
The Japanese producer released its benchmark May offer at $650/tonne CFR (cost and freight) NE (northeast) Asia, citing strong demand, compared with the settlement level of $560/tonne CFR NE Asia that it had achieved for its April cargoes.
The high value of downstream polyvinyl chloride (PVC) in the key Chinese domestic market was one of the main factors that encouraged the VCM producer to raise its offer, industry sources said.
Prices of ethylene-based PVC in China were last week assessed at yuan (CNY) 6,500-6,800/tonne ($952-996/tonne) EXWH (ex-warehouse), according to global chemical market intelligence service ICIS pricing.
Without taking into account the 17% value-added tax, this is equivalent to more than $800/tonne.
It costs less than $150/tonne to convert VCM into PVC, PVC producers said.
VCM sellers also noted strong demand from carbide-based PVC producers in China, who had been buying VCM to lessen their consumption of the relatively more costly calcium carbide feedstock.
No official counter-bids have been reported so far, but the narrowing spread between benchmark PVC and VCM offers in the region could dampen buying interest, VCM buyers said.
Benchmark May-delivery PVC cargoes were sold at $730/tonne CFR CMP (China Main Port), just $80/tonne higher than the latest VCM offer.
Chinese converters might be tempted to import PVC directly rather than purchase VCM, market sources said.
($1 = €0.77/$1 = CNY6.83)
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