India PVC market looks to China for lift

25 February 2010 04:30  [Source: ICIS news]

SINGAPORE (ICIS news)--Polyvinyl chloride (PVC) sellers in India are hoping that rising offers in the key Chinese market can help lift sentiment among Indian buyers, traders and producers said on Thursday.

Benchmark offers into China were released on Tuesday at $1,040/tonne (€769.6/tonne) CFR (cost and freight) China Main Port (CMP), $20/tonne higher than the previous month and contrary to the bearish expectations of some market players.

The higher offer was announced amid thin trading, subdued demand and declining feedstock ethylene values in northeast Asia in recent weeks.

"We did not expect offers in China to go up. If the price increase does go through in the end, this will definitely lift the mood among buyers in India,” a trader in India said.

Indian PVC prices, in both the domestic and import markets, had suffered from deteriorating buying sentiment since late-January. Buyers spooked by the stuttering Chinese market retreated to the sidelines while a massive import flux in December and January exerted further downward pressure on prices.

Import offers heard as high as $1,080/tonne CFR India last month fell to $1,020-1,030/tonne CFR India last week, buyers said. Major producers had not yet announced fresh offers into India but sparse selling indications had been heard at $1,060-1,070/tonne CFR India this week after the release of benchmark offers in China, said an Indian PVC pipe manufacturer.

"No one has bought at that level yet ($1,060-1,070/tonne CFR India). But they will be encouraged to do so if prices in China increase,” the manufacturer said.

Two other factors could also help to reverse the downbeat buying sentiment in the Indian PVC market, traders and producers said.

Seasonal demand in the downstream sectors looked set to pick up in the second quarter while the announcement of India’s federal budget this Friday would clarify funding uncertainties over its infrastructure projects, which formed a major source of India’s PVC demand, market players said.

Major Indian PVC producers include Reliance Industries, Finolex Industries and ChemPlast Sanmar.

($1 = €0.74)

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By: Ng Hun Wei
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