PVC prices

Tokyo (Platts)--20Jun2011/318 am EDT/718 GMT

The Asian PVC market is seen to be free fall this week despite limited availability of Asia-origin cargoes as the market was pressured by aggressive offers from the US and Europe, market sources said Monday.

As of Monday, the CFR China PVC price was hovering at around $1,149/mt, down $50/mt, or 4%, from Wednesday. The CFR India PVC price was also hovering at levels similar to the CFR China value. Market sources said the prices would likely fall further this week as aggressive offers for deepsea material would continue. Platts assesses the CFR China/India PVC price benchmark every Wednesday.

Market participants were surprised by the $50/mt price decline, as previously, the Asian PVC market was seen to be supported by limited availability of Asia-origin cargoes, especially from Taiwan. Spot PVC offers from Taiwan dried up as Formosa Plastics -- one of the largest PVC exporter in Asia -- has been out of the spot market due to low PVC plant operations amid a feedstock shortage.

The bearish sentiment in the Asian PVC market accelerated this week as US origin PVC cargoes were reported to have been offered at $1,100/mt CFR China main ports for late July arrival, around $70-80/mt lower than offer levels in the previous week. Europe-origin PVC was mainly offered to India at $1,120/mt CFR India, around $20/mt lower than late last week.

"The market seems to be falling much faster than expected. US and European producers are just trying to sell off at whatever prices," in order to reduce their high inventories, said a trader.

Deepsea offers turned aggressive Monday following the sharp plunge in upstream energy futures. Overnight Friday, NYMEX July crude futures settled $1.94 lower at $93.01/barrel, extending losses seen earlier in the week as US economic woes and concerns over Greek debts remained at the forefront, Platts reported earlier.

"What would happen if Formosa [too] was in the market... scary," said another trader.

Meanwhile, market sources predicted that Asian PVC would likely be at $1,050/mt CFR China in early July. --Fumiko Dobashi, fumiko_dobashi@platts.com