Asian PVC Prices Persistently Faces Downward Pressure Amid Weak Demand in July 2024
Asian PVC Prices Persistently Faces Downward Pressure Amid Weak Demand in July 2024

Asian PVC Prices Persistently Faces Downward Pressure Amid Weak Demand in July 2024

  • 25-Jul-2024 3:14 PM
  • Journalist: Patricia Jose Perez

The Polyvinyl Chloride (PVC) market in Asia has seen significant downward pressure recently towards the end of July 2024, driven by a combination of economic uncertainties, geopolitical tensions, and muted demand. Global economic concerns have continued to weigh on oil market sentiments, influencing the petrochemical derivatives market, including PVC. The geopolitical landscape has also played a role, with Israel's commitment to ceasefire negotiations in the Gaza conflict easing fears of supply disruptions in the region.

In China, PVC prices have dropped due to weakened demand in both domestic and export markets. The futures market for PVC has been on a prolonged decline during this low-demand season, putting additional bearish pressure on spot prices. China's struggle with oversupply has led producers and traders to offer discounts to stimulate sales.

Looking ahead, expected decreases in freight rates in late July and August could further impact purchase trends. The Asian spot PVC market has seen diminished demand as buyers await new price offers for August shipments from a major Taiwanese producer. In Southeast Asia, the market remains quiet, with buyers holding off on new purchases until Taiwanese offers are announced, reflecting a seasonal lull and expectations of easing freight rates.

Authorities at the Singapore transshipment port have noted a reduction in vessel congestion, which could lead to shorter wait times and potentially lower container freight rates. Market participants anticipate a gradual normalization of these rates. Geopolitical volatility has increased the appeal of the US dollar as a haven asset, contributing to its rise in value. This, along with mixed market signals, continues to pose a downside risk to crude oil prices. The PVC spot market is under pressure due to mixed supply and demand fundamentals, with prices expected to fluctuate further.

In India, Finance Minister Nirmala Sitharaman recently raised the basic customs duty on PVC flex banners from 10% to 25%, aiming to reduce imports of these non-biodegradable materials. This policy change has contributed to a decline in Indian PVC import prices, compounded by weak purchasing activity and easing freight costs from China. New offer announcements for August shipments from Taiwanese producers have been lower, reflecting dampened buying interest across South Asia.

From the supply chain perspective, several key PVC production facilities are undergoing maintenance. Dezhou Shihua's PVC plant in China will shut down for maintenance from August 15-25, 2024, affecting a capacity of 400,000 mt/year. Shaanxi Beiyuan's plant, with a capacity of 1.25 million mt/year, will also halt production for maintenance from August 5-25, 2024. Meanwhile, AGC Vinythai's PVC plant in Thailand, with a capacity of 70,000 mt/year, resumed operations in mid-July after a brief shutdown due to a technical glitch.

As per ChemAnalyst, Overall, the PVC market in Asia remains under pressure from various economic and geopolitical factors, with prices likely to continue experiencing fluctuations in the coming weeks.

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