After a Tough Ride in 2023, Here What to Expect from European PVC Market in 2024

As the year 2024 has arrived, market participants have started speculating pricing trend for multiple chemical commodities including Polyvinyl Chloride (PVC). As per the assessment of ChemAnalyst, PVC producers are expected to witness profitability pressures in Q1 2024 as global demand softens further due to a slower-than-expected recovery of the global economy. This could be exacerbated by an anticipated oversupply situation in the next quarter, which will exert pressure on margins and profitability of PVC producers in 2024. Additionally, the diminished PVC downstream demand from the construction sector posed challenges for PVC industry participants throughout the majority of 2023. The prevailing economic uncertainty overshadowed earlier anticipations of a surge in demand. Market participants faced sluggish consumption both domestically and in export markets, while PVC sellers grappled with narrow profit margins.

The demand for PVC has been subdued across the Eurozone, and this trend is anticipated to persist well into the latter half of 2024 due to the ongoing impact of high inflation and elevated interest rates pressure on household incomes. Following a delay in finalizing polymer contracts for 2024, some European producers have now confirmed the conclusion of their term agreements for the year. The uncertainty surrounding imports prompted some buyers to return to the contract market.

Given the pessimistic outlook, certain PVC buyers opted for fewer European volumes in Q1 of 2024, preferring lower-cost products from the United States or the Middle East. However, disruptions in freight logistics served as an incentive for some European buyers to secure locally produced materials for the upcoming year. The Suez Canal disruption is expected to result in additional requests for European producers, as the extended transit time for imported materials from the region becomes a consideration, noted a resins producer. Furthermore, anticipated high trasportation costs may offer some support to European producers by making imports more expensive, thereby reducing competitiveness against predominantly naphtha-based derivative plastics and chemicals production.

Despite concerns about freight disruptions, traders and manufacturers are still more concerned about the weaker downstream demand for PVC and as a result, moderately changing prices recently. The housing sector expresses cautious optimism for the upcoming year. Construction activities are predicted to decrease gradually in 2024. Conclusively, the PVC market showcasing mixed market sentiments for the coming month.

As per the ChemAnalyst, the PVC demand is anticipated to remain sluggish throughout the first quarter of 2024, as the challenges in the downstream consumption and economy will persist, compounded by the low seasonal inquiries during winters. However, the potential ease of inflation could contribute to a gradual recovery in activity towards the latter half of the next year, providing a source of optimism for industry players.