Asian Polyvinyl Alcohol Market on the Rise Amid Strong International and Domestic Demand

This August, the Polyvinyl Alcohol market witnessed a notable upward trend in Chinese and Indian market, Strong terminal market consumption from domestic and well as international market, coupled with high enthusiasm from downstream purchasers, contributed to this price increase. The robust demand for Polyvinyl Alcohol, despite challenges in the global textile market, was significantly bolstered by the accelerating growth in India's textile sector.

India's manufacturing activities slightly dipped in July 2024, down from June, and revised from an initial estimate, falling short of the market's expectation. Despite this slight decline, the manufacturing activities remained well above its long-term average and ranked among the highest in recent years. The manufacturing sector continued to thrive due to robust demand, particularly evident in a significant surge of new orders. Although growth slowed compared to June, sales figures remained robust by historical standards. Polyvinyl Alcohol production volumes also stayed strong, prompting manufacturers to ramp up their purchasing activities and expand their workforce in July.

Despite this, the Chinese Polyvinyl Alcohol market was slight consolidation due to weak downstream textile purchasing power. The traditional textile off-season in July has further exacerbated this trend, resulting in reduced demand for PVA. Manufacturers are currently adopting a just-in-time purchasing strategy, leading to a downward trajectory in PVA demand. In the near term, the PVA market is expected to mirror the weak consolidation of raw materials, with price fluctuations likely to remain within a narrow band.

In the Indian market, the increased demand for Polyvinyl Alcohol led to a surge in input cost inflation, which accelerated to one of the fastest rates seen in nearly two years, driving output charges to their steepest growth in over a decade. Nonetheless, the sentiment toward future Polyvinyl Alcohol production remained positive, with Polyvinyl Alcohol manufacturers expressing optimism about growth prospects. This positive outlook is driven by expectations of favourable economic conditions and continued strong demand, supported by marketing efforts and new client inquiries. Anticipation of further price increases in the Polyvinyl Alcohol market is high, as demand from downstream industries, including textiles, remains strong.

In the broader context, India's Budget 2024-25, presented by Finance Minister Nirmala Sitharaman, elicited mixed reactions from the Polyvinyl Alcohol downstream textile industry. While some provisions, such as the skilling incentive of ?3,000 (~$35.84) per worker per month and the enhanced credit guarantee scheme, were welcomed, concerns were raised about the budget's limited support for the sector.

Ashish Gujarati, former president of the Southern Gujarat Chamber of Commerce & Industry (SGCCI), praised the budget's focus on investment and employment, particularly highlighting the reduction in duty on raw spandex yarn from 7.5% to 5%. However, others, like R K Vij, emeritus president of the Textile Association of India (TAI), expressed disappointment over the lack of comprehensive measures for the textile industry.

According to ChemAnalyst, the prices of Polyvinyl Alcohol in the Chinese and Indian market are expected to rise, driven by the increasing value of imports from the international market. This upward trend is further fuelled by the ongoing governmental crisis in Bangladesh, a major textile producer in Asia, which has led to significant market disruptions. Consequently, there is a strong expectation of rising Polyvinyl Alcohol prices in the near term.  While India's recent budget provides several advantages to the manufacturing and MSME sectors, the Polyvinyl Alcohol downstream textile industry remains cautiously optimistic, anticipating more robust support in the future to navigate these challenging market conditions.