23 September 2013 09:33 [Source: ICIS news]
By Jasmine Khoo
(adds comments, market outlook)
SINGAPORE (ICIS)--Taiwan’s Formosa Plastics Corp (FPC) raised its official offers for October-lifting polyvinyl chloride (PVC) cargoes on Monday by $10-20/tonne (€8-16/tonne) from September prices, on the back of firm feedstock ethylene prices and tight spot PVC supply, a company source said.
October-lifting parcels are offered at $1,060/tonne CFR (cost and freight) China, at $1,060/tonne CFR SE (southeast) Asia and at $1,090/tonne CFR India, the source said.
These prices reflect an increase of $10/tonne for China and SE Asia’s prices, and an increase of $20/tonne for the Indian market.
Offers made to India had a bigger increase because of increased confidence on the suppliers’ side following the recent appreciation of the Indian rupee against the US dollar, the source said.
The end of the monsoon season in India also meant that buyers in the country would purchase more spot cargoes to replenish their inventories, the source said.
A usual discount of $10/tonne for letters-of-credit (L/C) at-sight payments, and for bulk purchases of over 1,000 tonnes applies, the source said.
FPC’s volumes offered for October were “less than usual” because of ongoing turnarounds at the company's chlor-alkali facilities, the source said without providing the exact quantity.
Most market participants consider the Asian PVC major's price increase reasonable, taking into account shortened supply and high ethylene prices.
On 20 September, ethylene prices were assessed at $1,325/tonne CFR NE (northeast) Asia, up by more than 8% from early August, according to ICIS data.
Most PVC suppliers had to nudge up offers to generate margins amid the spike in ethylene prices, the source from FPC said.
Demand for PVC is expected to peak next month, and possibly push prices higher, before consumption goes into a lull period during the winter season, when construction activities come to a halt, according to market participants.
Towards the end of the year, however, prices will be weighed down by higher regional supply, with the annual influx of deep-sea cargoes from the US into Asia. US PVC suppliers offer higher volumes to Asia at the end of each year to get rid of their inventory, they said.
Asian PVC suppliers, on the other hand, maintained that significant price declines in the near term is not possible, with strong ethylene values providing firm support to PVC prices.
($1 = €0.74)
Additional reporting by Stephanie Zhang and Becky Peng
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections