India PVC importers to grapple with higher November offers

18 October 2016 07:51 Source:ICIS News

SINGAPORE (ICIS)--India’s polyvinyl chloride (PVC) importers will have to grapple with higher offers from regional suppliers, at a time when demand typically picks up, industry sources said on Tuesday.

Other suppliers in Asia will likely take the cue from Taiwanese major Formosa Plastics Corp (FPC), which announced a sharp $40/tonne hike in its November export prices to Asia, citing lower availability of supply from China.

New offers from other regional suppliers are expected to be announced by the end of the week, market sources said.

On 14 October, India’s spot PVC import prices were assessed at $925-950/tonne CFR (cost and freight), according to ICIS data.   

Most industry players were surprised by FPC’s $40/tonne price hike for November cargoes, particularly for the Indian market.

“They are crazy, it's beyond my thinking. It’s difficult to understand their logic,” an Indian trader said.

India is a major importer of PVC in Asia. In the fiscal year ending March 2015, the country’s PVC consumption stood at around 2.5m tonnes, while domestic production was at 1.38m tonnes.

Demand for the material, which is used in pipes, usually improves during November – at the end of the monsoon season, in line with increased agricultural activities, market sources said.

“We were definitely expecting an increase in offers, maybe about $10-20[/tonne], but $40[/tonne] was quite unexpected,” a source at a different Taiwanese producer. 

Buyers in India are expected to pose strong resistance to FPC’s sharp increase in November price, as this is the second consecutive month that it increased prices by $40/tonne.

“Feedback [from buyers] is negative so far, the price is not getting accepted at the moment. It might get accepted eventually, but I am unable to understand the outlook now,” another India-based trader said.

On the other hand, a South Korean producer said that buyers “will have no choice but to accept the [higher] prices” because of the tight availability of exports.

Exports of ethylene-based PVC from China have become limited amid price spikes in the domestic market since July this year, industry sources said.

Picture (top): PVC is used to make water pipes (KeystoneUSA-ZUMA/REX/Shutterstock)

Focus article by Jeslyn Lerh

By Jeslyn Lerh