Turkey moves back into balance with China's PVC market

This week the import PVC market in Turkey has moved up particularly at the low end although the downward trend is still effective in global PVC markets, particularly in China, where November sell ideas from Asian suppliers are announced lower. The turnaround in the Turkish PVC market is attributed to the fact that the market had been trading at a discount to China for the past several weeks.

As was already noted in ChemOrbis Daily Headline "SEA's PVC markets move lower along with global trends," November sell ideas to China have been announced at $800-850/ton on CFR basis from Korean and Taiwanese producers, representing $40-70/ton decreases from the overall October done deal level. Although real offers are still awaited to the country, the Taiwanese producer has already approached the Southeast Asian market at a much lower price at $790-810/ton CIF SEA for November. Indeed, bids reported from Chinese buyers for November import business are much lower at $750-800/ton CFR. While the trend is obviously downwards in Asia for next month, the question is how much prices will go down in the region. Some buyers expect to see real done deal prices matching their bids while others assume that rising crude oil, naphtha and ethylene will keep the decreases relatively smaller.

Contrary to these bearish developments in Asia, the Turkish PVC market has moved higher this week with offers from Asia and the US rising $30-40/ton at the low end from last week respectively to $870-900/ton and $840-860/ton CFR Turkey, cash, subject to 6.5 duty and $45/ton antidumping duty if applicable. The turnaround in the Turkish PVC market is attributable to the fact that Turkey had been trading at a discount when compared to China up until late last week, when PVC prices from Asia and the US were reported at levels as low as $810-830/ton to Turkey while the last completed business to China for October had been done weeks earlier at $870-890/ton CFR China.

Likewise, players in Egypt have reported that no offers are available this week from Asia whereas Korean and Japanese PVC cargoes had come down to $820/ton CIF Alexandria, cash equivalent payment last week.

The disparate directions the Turkish and Asian markets are following have caused some confusion amongst Turkish players recently. Indeed, it is not contradictory to see import PVC prices continuing to come down in China but turning up in Turkey. This is because Asian sellers diverted their attention to the Turkish market along with Egypt at a time when demand was at a deadlock in China before and during a National Day holiday period. The fact that very low prices were already provided to Turkey and Egypt has also shown that these markets have been moving ahead of the trends in China, which traditionally had been the trendsetter.

Accordingly, sellers' attempts to withdraw such low offers from the Turkish and Egyptian markets are in tandem even with lower prices to China. The lower November sell ideas still indicate a higher price to the Mediterranean.  Sell ideas of $800-850/ton CFR China would translate to a PVC offer around $875-925/ton CFR Turkey/Egypt basis considering $20/ton freight from the originating country and $95/ton freight to the Mediterranean.