China’s PVC prices to continue falling in July

17 June 2011 11:01  [Source: ICIS news]

SHANGHAI (ICIS)--China’s polyvinyl chloride (PVC) prices are expected to continue declining in July because of waning demand from the construction industry following Beijing’s measures to curb speculation in the property market, market sources said on Friday.

The mainstream prices of PVC were at yuan (CNY) 7,800/tonne ($1,204/tonne) ex-warehouse (EXWH) in east China on 17 June. Prices were at their lowest in the second quarter around the Spring festival holiday in early February, falling to CNY7,600/tonne according to data from Chemease, an ICIS service in China.

Import prices were at $1,120-1,170/tonne CFR (cost & freight) China Main Port (CMP) on 17 June, $60-80/tonne lower than 10 June, according to Chemease.

The downstream pipes and profiles sector, which accounts for around 40% of PVC consumption in the domestic market, has been affected by the Chinese government’s real estate regulation, market sources said.

The Chinese media reported last year that Shanghai and Chongqing would be the first cities to undertake property tax trials around 2011.

And in February this year, Beijing announced restrictions on home purchases. Effective 17 February, a family bearing a household certification living in the city can only buy a house if it has yet to own one or has only one existing house. Families owning two to more houses would be prohibited from making further purchases.

“Our sales are poor in the first half of the year because of shrinking housing sale volumes. We had to cut our operating rates because of limited orders,” a major pipe producer in east China said.

“We have a large number of feedstock and product inventories. Above all our product inventories are more than 5,000 tonnes in June compared with the same period of last year,” a major profiles producer said.

 “The decrease in demand has resulted in downward pressure in PVC prices, but the monthly output of PVC remains the same as last year,” a major trader in east China said.

“Although feedstock calcium carbide has been exerting upward pressure to PVC, the weak demand is seriously dragging down the values,” a market participant said.

($1 = CNY6.48)

Additional reporting by Amanda Zhang

For more on PVC, visit ICIS chemical intelligence

By: Maggie Zhu

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