Asian PVC Prices Edge Higher in lieu of Expensive Imports and Logistical Challenges

The Asian Polyvinyl Chloride (PVC) market experienced an overall increase in prices during the first half of May 2024. Traders observed a significant rise in freight costs in Northeast Asia for transporting PVC across the APAC region, resulting in higher prices as increased freight costs affected current import price ranges. Additionally, the US PVC's new capacities are expected to decrease the availability of import cargoes for Asian buyers. Meanwhile, the settlement price of the main contract of WTI crude oil futures in the United States was up 0.7%. The settlement price of Brent crude oil futures main contract was up 0.6% in the present week further impacting PVC operational costs.

In recent months, rising energy and feedstock prices have increased production costs and freight rates, significantly affecting sellers of Chinese, South Korean, and Japanese PVC to Southeast Asia. Notably, the current freight rate from China to India has surged in early April. This has certainly led to upward pressure on the persistent low trend of the pricing range for PVC K67. However, despite these upward pressures, demand in the Asian market remains moderate. This has intensified an already loose supply situation, impacting the PVC market in the region. The market players do not anticipate a quick resolution to the supply issues. Thus, they opted to pause the PVC price momentum for the time being.

There are only need-based procurement sentiments and the overall regional demand is still weak. The month of May normally falls in a peak season, so demand is normal, but manufacturers and sellers in the PVC industry don’t see any interest in accumulating stocks.

Traders have indicated that the ongoing maintenance season in Asia and the Middle East might reduce PVC availability in both India and Southeast Asia. Additionally, market players are closely monitoring the aftermath of an explosion at SCG’s Map Ta Phut Terminal in Thailand to assess its impact on PVC production. The incident is expected to influence PVC prices in Southeast Asia and India. Despite these potential disruptions, PVC prices in Southeast Asia remained stable this week. In Vietnam, a significant PVC buyer reported that demand remains weak due to the sluggish real estate sector.

As per ChemAnalyst, PVC prices are expected to surge in the Asian market in the upcoming weeks amidst expensive production costs and persistent logistical challenges. In the current unstable political climate, many projects are on hold, and purchasing activity has stalled. Market players anticipate no improvement in demand this year. However, with tighter supply during the maintenance season, we are hopeful that prices may increase. The combination of maintenance activities and unforeseen incidents underscores the importance of monitoring supply chain dynamics.