(ICIS) --
China’s polyvinyl chloride (PVC) import prices are likely to rebound next year
on the back of tight supply, but the gains may be undermined by weak downstream
demand and a bearish global economy, industry sources said.
PVC prices in
China began declining in mid-August and fell to an all-year low of USD
840-860/tonne (EUR 647-662/tonne) CFR CMP on 4 November. That is 31% lower as
compared with the 2011 peak of USD 1,220-1,250/tonne CFR CMP seen in late
May.
The downtrend in prices was due to the high interest rate in China
and the tightening of its monetary policy, which restricted end-users’ cash flow
and weakened buying sentiment.
However, prices rose following an
explosion at Japan’s Tosoh Corp’s 550,000 tonne/year No 2 vinyl chloride monomer
(VCM) line at Nanyo in Yamagata prefecture on 13 November, to settle at to
USD 940-950/tonne CFR CMP on 23 December VCM is the key feedstock for the
production of PVC.
Market players said the recent rise in PVC prices was largely because of the
tightened supply as well as high feedstock VCM prices, instead of actual demand
as downstream consumption in China has been persistently weak. VCM prices
have been hovering at USD 750-800/tonne CFR NE Asia since
mid-November.
“The PVC price increase is because of tight supply and a
cost push because of high feedstock VCM prices,” a Japan-based producer
said.
Looking ahead, market participants have different opinions on the
outlook for the PVC market next year. Some market participants are optimistic
about an improvement in demand after the Lunar New Year holiday in late January
and said that will bode well for prices.
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Moreover, there are serious concerns about the eurozone debt
crisis as well as weak US economy, which are expected to persist in the coming
year. The bearish global economy may dampen the buying interest for PVC as
the US and Europe are big re-export markets for downstream Chinese
manufacturers, industry sources said. “In general, prices should be on an
uptrend, but not so strong, because the economic situation is not stable,” said
a trader in Japan.
mrcplast.com
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