Vietnam has adopted a cautious approach since its COVID-19 lockdown, as China did, after seemingly flattening the coronavirus curve. With imported PVC prices in Asia at their lowest levels in over a decade amid India's absence, global PVC sellers are now focusing on these two markets in hopes of seeing better demand. Demand has already been higher in China with the easing of restrictions.
China, the initial epicenter, was the first country to emerge from the coronavirus crisis. Local demand has improved since the country eased domestic travel restrictions to facilitate worker mobility, and many downstream factories have reopened.
Accordingly, overseas PVC suppliers have shifted their focus to China to divert their surplus goods.
Demand for imported goods has recently improved due to higher domestic raw material costs, a trader in China reported.
Vietnam is expected to replicate the recovery seen in China.
Market participants are looking to Vietnam to replicate the recovery seen in China, which has already seen a rebound after lifting restrictions. Vietnam lifted COVID-19-related restrictions last week after reporting no new cases.
The lifting of lockdowns has brought hopes of increased demand and higher production rates as people return to work and go out more. This optimism also suggests that PVC prices may have seen a floor in the short term, according to market analysts.
Demand for our finished products is starting to improve as the rainy season approaches and the demand for raincoats increases. We have started adding more inventory 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 prices remind you to bargain.
Domestic PVC prices in Vietnam are currently down 11% compared to March, standing at USD923/tonne on a FD basis, the lowest level since the first quarter of 2016, according to ChemOrbis price index data.
At current prices, it's very cheap and we're still buying it even though the market isn't great. But we don't think PVC prices will drop sharply in the next few months, a local trader said.
There are still downside factors to watch. Is it too early to be optimistic?
Despite improved demand in China and Vietnam, weak sentiment in the rest of Southeast Asia and India could weaken import prices and create competition, putting further pressure on domestic prices.
Overall demand remains weak with lockdowns being extended or tightened in countries such as India, Indonesia, Malaysia, Singapore and the Philippines, regional retailers noted.
Noticing weak demand, a major Taiwanese producer lowered its Asian offer price by USD160/tonne last week.
Following a major Taiwanese producer, an Indonesian producer lowered its May PVC K67-68 offers for Southeast Asia by USD190/tonne, while a Thai PVC producer cut its May offers by USD165/tonne.
Asian markets are also under pressure from low-priced deep-sea goods from the US, which have been heavily impacted by a lack of demand from major importer India.
