Asian PVC Market Remains Bearish with the Sole Exception Being China

The Chinese Polyvinyl Chloride (PVC) market outperformed all the Asian countries in the week ending December 15, 2023, as the rise in feedstock costs and limited stock availability led the current PVC prices to rise in China despite slow downstream demand. However, The Asian PVC prices in South Korea and other Asian markets saw a decline in the week ending December, as the market players were facing challenges. These challenges were marked by increased supply, decreased costs, and, most significantly, persistently slow demand in the downstream construction and packaging sector.

In Asia, some players believe the PVC market may have little room for further decline given high production costs and tight profit margins. However, optimism is tempered by unpredictable demand scenarios influenced by global economic uncertainties. Major traders in Asia initially expected a meaningful demand recovery in the next quarter but have turned more pessimistic, citing the slow recovery of key consumer sectors. The prevailing belief of the current price downturn will persist through the Chinese New Year in Asia as per the latest analysis. Most PVC producers hold a gloomy outlook for the near term. Therefore, the PVC price for Suspension Flexibe Grade K67 has assessed a dip of 2.3%, FOB Busan (South Korea) in the middle of December 2023.

The PVC Prices faced downward pressure in the Asian market including Taiwan and Thailand due to various bearish factors, such as reduced offers from major international suppliers, a subdued market sentiment, and abundant product availability in the year-destocking market atmosphere. Additionally, weak downstream construction and packaging demand coupled with no bottlenecks related to the regional supplies added downward pressure on the Asian PVC prices.

Unlike the other Asian PVC markets, Chinese PVC prices saw an increment this week, as the prices experienced an initial rise followed by a subsequent decline in the week ending December 15, 2023, with a surge of 2%. Currently, the market exhibits average conditions with subdued trading activity and limited enthusiasm for downstream procurement. Manufacturer quotations remain largely stable, reflecting cautious downstream demand in actual transactions. On December 14th, international crude oil futures registered a notable increase, driven by a strengthening US dollar and the International Energy Agency's upward revision of next year's oil demand forecast. WTI crude oil futures settled at $71.58 per barrel, a 3.0% increase, while Brent crude oil futures settled at $76.61 per barrel, marking a 3.2% rise. Regarding feedstock calcium carbide, also witnessed a week-on-week increase in prices among manufacturers.

As per ChemAnalyst, the PVC prices will remain Southward in Asia due to insufficient downstream demand and increased inventory availability. Moreover, year-ending destocking period in the global market may also impose further declines in the PVC industry during December 2023.