SINGAPORE--Polyvinyl chloride (PVC) imports into China in 2008 could fall below 1m tonnes for the first time in 10 years on economic uncertainties and Olympic regulations hampering the chlor-alkali industry, producers and traders said this week.
The country only imported 425,047 tonnes of pure PVC (HS code: 39041010 and 39041090) in the first six months of 2008, a fall of 19% over the same period last year, according to statistics from the China Customs. Around 1.014m tonnes of PVC was imported into China in 2007.
"Demand has not been so strong most of the time in recent months. In the worst-case scenario, China could end up importing less than 1m tonnes this year," said a PVC producer who exports to China.
Other market sources agree that the likelihood of such a scenario was high, given current market trends. "The country has on average imported less than 80,000 tonnes a month so far (this year). It will have lots of catching up to do if its PVC imports are to remain at above 1m tonnes," a PVC trader said.
Although PVC prices are now at record levels, industry players noted this was mainly because of the rise in naphtha and ethylene prices. Economic woes in the US have reduced the country s appetite for imports the main outlet for China s PVC products, while inflationary pressures are squeezing some Chinese converters out of business, they said.
"In the past when PVC prices are at record highs, it usually means that the economy is doing well. Not this time. We ve noticed that some of the smaller downstream factories (in China) are facing bankruptcy because of surging production costs," a northeast (NE) Asia PVC supplier said.
PVC imports into China were last week assessed at around $1,305/tonne CFR (cost and freight) China, a 32% increase since the start of the year, according to global chemical market intelligence service ICIS pricing. Ethylene prices also reached record highs last month before softening in recent weeks.
The problem was compounded by the imposition of lending limits by Beijing to combat inflation, market sources added. According to local media reports, growth in Chinese bank loans had slowed to 15% in June, compared with a peak of 18% last October. This had affected the ability of many factories to fund new purchases of raw materials.
No official figures were available but according to a Chinese trader, as much as 20% of the downstream factories in some parts of China had been "badly affected" by the economic conditions.
Further weakening demand for PVC imports were the energy, logistical and environmental curbs imposed in preparation for the Beijing Olympics, traders and producers said. "Many factories are shutting down because of the Olympics. PVC demand will probably improve during the last quarter of this year when some of these factories come back online," a PVC supplier said.
Other market players are sceptical if China s post-Olympic demand could push its PVC import volume to over 1m tonnes this year. A trader, for example, noted that other long-term factors meant that the decline of PVC imports into China was likely to be an inevitable trend.
China is en route to becoming a net exporter of PVC in a few years time while several Japanese, South Korean and Taiwanese producers have also been setting up plants in China. This would further reduce the country s need for PVC imports, he said.
The country only imported 425,047 tonnes of pure PVC (HS code: 39041010 and 39041090) in the first six months of 2008, a fall of 19% over the same period last year, according to statistics from the China Customs. Around 1.014m tonnes of PVC was imported into China in 2007.
"Demand has not been so strong most of the time in recent months. In the worst-case scenario, China could end up importing less than 1m tonnes this year," said a PVC producer who exports to China.
Other market sources agree that the likelihood of such a scenario was high, given current market trends. "The country has on average imported less than 80,000 tonnes a month so far (this year). It will have lots of catching up to do if its PVC imports are to remain at above 1m tonnes," a PVC trader said.
Although PVC prices are now at record levels, industry players noted this was mainly because of the rise in naphtha and ethylene prices. Economic woes in the US have reduced the country s appetite for imports the main outlet for China s PVC products, while inflationary pressures are squeezing some Chinese converters out of business, they said.
"In the past when PVC prices are at record highs, it usually means that the economy is doing well. Not this time. We ve noticed that some of the smaller downstream factories (in China) are facing bankruptcy because of surging production costs," a northeast (NE) Asia PVC supplier said.
PVC imports into China were last week assessed at around $1,305/tonne CFR (cost and freight) China, a 32% increase since the start of the year, according to global chemical market intelligence service ICIS pricing. Ethylene prices also reached record highs last month before softening in recent weeks.
The problem was compounded by the imposition of lending limits by Beijing to combat inflation, market sources added. According to local media reports, growth in Chinese bank loans had slowed to 15% in June, compared with a peak of 18% last October. This had affected the ability of many factories to fund new purchases of raw materials.
No official figures were available but according to a Chinese trader, as much as 20% of the downstream factories in some parts of China had been "badly affected" by the economic conditions.
Further weakening demand for PVC imports were the energy, logistical and environmental curbs imposed in preparation for the Beijing Olympics, traders and producers said. "Many factories are shutting down because of the Olympics. PVC demand will probably improve during the last quarter of this year when some of these factories come back online," a PVC supplier said.
Other market players are sceptical if China s post-Olympic demand could push its PVC import volume to over 1m tonnes this year. A trader, for example, noted that other long-term factors meant that the decline of PVC imports into China was likely to be an inevitable trend.
China is en route to becoming a net exporter of PVC in a few years time while several Japanese, South Korean and Taiwanese producers have also been setting up plants in China. This would further reduce the country s need for PVC imports, he said.
