PVC sellers rely on hopes of better demand in China, Vietnam

Vietnam has been cautious since its COVID-19 lockdown, as China did, after seemingly flattening the curve of the coronavirus. With import PVC prices in Asia standing at their lowest levels in more than a decade amid India's absence, global PVC sellers are now focusing on these two markets hoping to see better demand.

Demand has been higher in China with the easing of restrictions

China, the original epicenter, was the first country to come out of the coronavirus crisis. Local demand has improved since the country eased domestic travel restrictions to facilitate the movement of workers, and many downstream factories have resumed operations.

Accordingly, overseas PVC suppliers have shifted their focus to China to redirect their surplus goods.

Demand for imports has been better recently due to more expensive domestic raw materials, a trader in China reported.

Vietnam is expected to replicate the recovery in China

Market players are looking to Vietnam to replicate the recovery in China, which has seen a recovery after they lifted restrictions. Vietnam lifted COVID-19-related restrictions last week after reporting no new cases.

The lifting of the blockade has brought hope of increased demand and increased production rates as people return to work and go out more. The optimism also suggests that PVC prices may have seen a floor in the short term, according to market players.

The demand for our end products is starting to get better as the rainy season is coming and the demand for raincoats will increase. We have started adding more reserves because the current level is profitable, a Vietnamese converter said.

The rainy season in Vietnam typically lasts from April to September, with June, July and August being the wettest months.

Low domestic price prompts to bargain

Domestic PVC prices in Vietnam are currently down 11% from March at $923/ton on an FD basis, which is the lowest level since the first quarter of 2016, according to ChemOrbis price index data.

At the current level it is very cheap and we still buy even though the market is still not so good. But we don't think PVC prices will drop sharply in the next few months, a local trader said.

There are still bearish factors to watch. Is optimism early?

Despite improving demand in China and Vietnam, weak sentiment in the rest of Southeast Asia and India could weaken import prices and create competition as well as put additional pressure on imports. with local prices.

Overall demand remains weak with lockdowns being widened or tightened in countries such as India, Indonesia, Malaysia, Singapore and the Philippines, sellers noted in the region.

Realizing weak demand, a major Taiwanese producer cut its Asian offer by USD160/ton last week.

Following the major Taiwanese producer, an Indonesian producer reduced its PVC K67-68 May offers for Southeast Asia by $190/ton while a Thai PVC producer cut its May offers by they equal USD165/ton.

Markets in Asia are also pressured by low-priced deep-sea cargoes from the US, which have been hit hard by a lack of demand from major importer India.