Asia PVC tumbles amid US-China trade war

Spot polyvinyl chloride (PVC) prices in northeast Asia fell to their lowest in more than nine months, weighed down by competitively priced US cargoes and uncertainty amid the ongoing US-China trade war.

On 21 September 2018, spot prices fell $92.50/tonne or 9% week on week to an average of $835/tonne FOB (free on board) NE (northeast) Asia, according to ICIS data. The last time FOB NE Asia spot prices were lower was on 08 December 2017, the data showed. Spot prices were stable in late July to end-August, with limited upside due to depreciating Asian currencies against the US dollar.

A major northeast Asian PVC producer lowered its October-loading offers by $90/tonne last week amid a recent influx of US-origin PVC cargoes.

While buying reception to US PVC was lukewarm due to longer delivery time of around two months, the lower-priced cargoes have been weighing down on market sentiment in Asia since late August.

Increased supply from the US into China and southeast Asia may have been due to lower feedstock prices and high operating rates in the country, said market sources.

Another factor in the softer prices was the sluggish situation in China due to the inclusion of finished goods containing PVC in the US’ third round of tariffs on Chinese goods worth $200bn. This has dampened buying appetite in China, a significant importer of PVC, while Taiwan is a major exporter of the material in Asia.

“It seems that [the] tariffs already made some Chinese buyers reduce their operating rates,” said a trader.

In the week ended 21 September 2018, CFR China prices for PVC fell $82.50/tonne week on week to $875/tonne CFR (cost and freight) China, its lowest point since January this year, ICIS data showed.

The products above are in the tariff list and totalled around $120m in general imports from China to the US last year, according to US International Trade Commission data.

The tariffs took effect on 24 September at an initial rate of 10%, and will rise to 25% on 1 January 2019. Southeast Asia’s PVC prices were also affected by the situation in northeast Asia, falling to their lowest point since January, according to ICIS data.