Southeast Asia PVC Market Awaits September Direction After Taiwanese Producer Raises August Offers

Southeast Asia’s import PVC market has remained largely flat in August after a three-week recovery during July lost momentum. Weak buying interest and softer crude oil prices earlier this month encouraged some sellers to lower their offers.

The market outlook has now become less clear following an unexpected upward revision by a major Taiwanese producer. The move could strengthen sellers’ price expectations and lead buyers and suppliers to reassess their outlook for September. Meanwhile, firmer crude oil has improved cost support, although weak downstream demand continues to restrict the market’s upside.

Discounts Fail to Stimulate Buying

Some suppliers reduced their offers by around $10-20/ton at the start of this week in an attempt to attract buyers. Chinese-origin PVC was among the most competitive material, with offers reaching around $720/ton CIF Southeast Asia, cash.

However, the lower prices did not result in a significant improvement in purchasing activity. Buyers remained cautious due to the seasonal slowdown and uncertainty over future price movements. Most continued to cover only immediate requirements, limiting sellers’ ability to push prices higher.

The weak market conditions had previously led many participants to expect the Taiwanese major to announce lower September prices, with initial expectations centered around $700-750/ton, depending on the destination, shipment terms and payment conditions.

Taiwanese Producer Takes a Firmer Position

The market outlook changed after the major Taiwanese producer raised its August offers to Asian buyers by $20/ton, following the $45-50/ton increases announced in late July.

The latest revision surprised market participants and challenged earlier expectations of lower September nominations.

The producer’s revised offer stands at $800/ton FOB Taiwan, cash, implying import levels in the low-to-mid-$800s/ton for Southeast Asia. These levels are significantly above some current market indications, with Chinese PVC available in the low-$700s/ton CIF and Japanese material reportedly traded at $750/ton CIF Vietnam, cash.

The latest increase indicates that the producer is prepared to defend higher price levels despite limited demand. This could encourage other suppliers to maintain firmer offers and prompt the market to reconsider expectations for September.

Crude Provides Additional Cost Support

The producer’s price increase comes as crude oil prices have regained strength and its remaining August allocation is reportedly limited. Crude futures have remained volatile but recently moved higher amid renewed US-Iran tensions and uncertainty surrounding the Strait of Hormuz, with Brent crude approaching $90/bbl.

Higher energy costs have strengthened PVC’s cost base and could provide producers with greater justification to maintain firm pricing in the coming weeks.

However, weak consumption remains a major obstacle. Buyers continue to resist elevated offers while comparatively cheaper Chinese and US cargoes are still available.

A Vietnamese converter said the Taiwanese producer’s offers were too high, noting that US material had reportedly traded at around $680/ton CIF. The converter added that buyers were waiting for more workable prices, although levels above $700/ton might still need to be accepted because cheaper material is becoming difficult to secure.

The Taiwanese producer’s September offer could therefore come in higher than previously expected, but weak demand is likely to limit the extent of any increase. Southeast Asia’s PVC market may turn firmer in the near term, although sustained gains will depend on an improvement in buying interest.

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