PVC producers face buying resistance from China's cable makers

10 March 2010 10:15  [Source: ICIS news]

SINGAPORE (ICIS news)--Polyvinyl chloride (PVC) producers face mounting buying resistance from cable makers in China, who are currently struggling with a general rise in input costs, traders and producers said on Wednesday.

Negotiations for March-delivery PVC cargoes into China were concluded at around $1,040/tonne (€770/tonne) CFR (cost and freight) CMP (China Main Port), which was $20/tonne higher than the previous month, according to a PVC supplier in Japan.

Resistance from Chinese buyers – particularly from cable manufacturers – has, however, been strong, the supplier noted.

“Demand from cable makers was not so good because prices of copper and plasticizers have been going up recently. Cable makers say their margins are very low as a result and have to save on their PVC costs,” said the supplier.

Cable makers use PVC as casing for copper wires. Plasticizers are added to make the PVC flexible.

Prices of dioctyl phthalate (DOP), a key plasticizer, have been rising since last September, gaining 6% in the past four weeks to reach $1,720-1,750/tonne CFR East Asia, according to data from global chemical market intelligence service ICIS pricing.

Market players attributed the relentless price increasese to a rise in feedstock values.

Copper prices, meanwhile, hit $7,600/tonne in early March – the highest since 20 January – after a severe earthquake hit Chile, the world’s largest producer of the metal.

“Our supplies are tight, so we managed to increase our PVC prices for March. But the cable makers have told us they definitely cannot accept any more increases,” said another Asia-based PVC producer.

Buying resistance from other PVC buyers, such as those from the film and sheet sectors, was less strong, as they do not use plasticizer, the producer added.

According to market players, wire and cable makers consume around 7% of global PVC production, while pipe manufacturers' share is around 40%.

($1 = €0.74)

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By: Ng Hun Wei
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