Reliance Industries cancels PET price protection; Formosa Plastics defers September PVC shipment quotes

Recently, the Asian PVC market has entered a period of intensive price adjustments. Leading enterprises in regions such as India and Taiwan have successively raised their export offers, heating up bullish sentiment in overseas markets; in contrast, domestic PVC prices continue to fluctuate at low levels, with the industry deeply mired in losses, highlighting a divergence in trends between domestic and foreign markets.

Indian chemical giant Reliance Industries (RIL) took the lead in initiating the price adjustment cycle.

Since late July, RIL's PVC prices have cumulatively increased by 7,000-9,000 rupees/ton, equivalent to approximately 74-93 USD/ton (RMB 499-627/ton). Against the backdrop of rising prices, India remains the largest export destination for Chinese PVC, presenting a potential window of opportunity for domestic PVC exports to India.

In addition to PVC price adjustments, a trade policy change by Reliance Industries has drawn significant market attention.

The company announced that, effective August 14, it will officially abolish the price protection mechanism for PET products.

Previously, the industry standard rule was that if customers booked orders in advance and the listed price fell during the pickup phase, settlement could be made at the lower adjusted price. With the implementation of the new rule, all orders will be uniformly executed based on the listed price on the day of pickup. Both price rise and fall risks are to be borne solely by the downstream purchasers, and upstream companies will no longer assume price floor responsibilities. Industry chain risks will further shift towards the downstream.

Looking across the Asian PVC export market, Formosa Plastics has raised its export offers.

In August, Formosa Plastics' PVC shipment offers were raised again, with a single increase reaching 20 USD/ton (equivalent to RMB 135/ton). Among them, the CIF India offer was quoted at 880 USD/ton, a price already significantly higher than India's previously established import duty-free threshold of 766 USD/ton. Coupled with the impact of relevant Indian import control policies, the competitiveness of Formosa Plastics' PVC supply in the Indian market has strengthened.

Currently, Formosa Plastics' pre-sale offers for September shipments have been postponed for release until next week. The mainstream market view believes that supported by raw material costs, Asian mainstream PVC producers will likely maintain a relatively strong trend in their September export offers.

While there are constant calls for price increases in overseas markets, the trend in the domestic PVC spot market remains relatively weak. At this stage, domestic PVC market prices continue to oscillate and consolidate at the bottom within the range of 4,400-4,550 RMB/ton. Pressure on industry profitability is prominent, with calcium carbide-based PVC currently incurring a loss of about 670 RMB per ton, leaving the entire industry in a state of deep loss.

Industry analysts indicate that the current divergence between domestic and foreign PVC markets in Asia is evident, with overseas costs and demand expectations supporting higher export prices, while insufficient recovery in domestic terminal demand drags down spot prices, preventing them from strengthening. Moving forward, on one hand, attention needs to be sustained on the implementation of September PVC shipment offers by major Asian manufacturers and changes in India's import policies; on the other hand, the operation rate of domestic downstream product manufacturing and the pace of demand recovery may determine whether domestic PVC can break out of its current bottom range.