The European PVC (Polyvinyl Chloride) prices exhibited a stagnancy towards the end of May 2024 as the modest recovery in the downstream market proved short-lived. The PVC prices reversed direction amid bearish fundamentals recently. The PVC sellers failed to achieve any margin expansion despite earlier optimistic expectations. Unsupportive supply-demand dynamics were blamed for May's declines, with accumulating stock levels pressuring PVC sellers and intensifying the fight to capture limited demand. Participants reported aggressive spot offers for additional quantities, highlighting the sales pressure among regional sellers. Besides low regional demand, poor export sales also contributed to stock accumulation in the PVC industry.

PVC producers are caught in a tight market situation of heightened competition in response to waning demand and high production costs. As per the latest insights, only a few customers accepted buying extra volumes and they do not expect major price variations in June. PVC demand lagged behind expectations across the Eurozone, defying seasonal patterns, while converters continued to report insufficient order entries. There is ongoing competition in the downstream segments, with players cutting the prices of final products to boost sales at the termination of this month.

From the downstream demand perspective, the construction sector signals no near-term recovery amid high inflation. Confirming the fierce competition and the consumer purchasing sentiments slowdown despite the high season. High costs prevented the new orders from the building sector. Cable manufacturers also cited high inflation as a cause for weaker orders and aggressive pricing. Despite declining import volumes due to an ongoing investigation, supply remains more than sufficient within Europe.

European buyers are focusing on local markets and avoiding US PVC to steer clear of potential issues, particularly with an impending regulatory decision. Reduced imports from the US are likely to benefit local suppliers, but this is not expected to significantly impact overall supply levels for converters. Instead, it will help balance supplies in a weak global demand environment.

As per the ChemAnalyst, the PVC prices are expected to show volatility in the European market. Without a rise in demand, there is little hope for margin recovery, even with reduced import volumes. Current margins are very low for producers, given stable prices amidst volatile upstream costs. June monomer contracts might see modest decreases. The market is watching whether the Taiwanese major's planned June price hikes in Asia will influence other PVC markets, especially with a supply surplus and the rainy season approaching. In the long term, China's efforts to stimulate its property sector could provide a boost to the global market.