Limited Supplies Balance Out Dull PVC Demand in Asia, Prices Sustains Stability

The PVC (Polyvinyl Chloride) prices in the Asian market exhibited steady momentum as the downstream demand in the region remained unchanged along with tight supplies. Further, the Shippers and exporters in Asia remain deeply concerned about the Red Sea, given the escalating freight rates attributed to a growing scarcity of container vessels impacting market transactions in the PVC industry.

During the second half of January 2024, the Asian PVC market players paused the price movement for the time being as the declining gap between demand and supply played a pivotal game. In a noteworthy development, upstream crude oil prices have experienced a consecutive two-week upswing, reaching their peak on Friday and settling at levels unseen in almost two months. The surge comes on the heels of positive U.S. economic growth and indications of Chinese stimulus measures, which have significantly heightened expectations for increased demand. Additionally, concerns surrounding the supply from the Middle East have provided additional support to the upward trajectory. Brent crude futures exhibited a robust ascent, climbing by USD 1.12, or 1.4%, concluding at USD 83.55 per barrel. This marks the highest closing figure since November 2023. Simultaneously, West Texas Intermediate crude (WTI) saw an increase of 65 cents, or 0.8%, settling at USD 78.01 per barrel, also achieving its highest close since November. As a ripple effect, this surge in the input costs for PVC led to a reduction in the production rates and contributed to the tightening of the inventory availability.

In a recent analysis, PVC prices in certain regions of East China have witnessed a notable decrease. The downstream market, has displayed a slight fluctuation over the last three months. Presently, there is a continued downturn in downstream market demand, leading to the closure of construction sites in East China and imposing considerable inventory pressure on the manufacturers. Consequently, to facilitate shipping, the PVC market is taking a prominent downward trajectory for the time being.

From the PVC demand perspective in the APAC region, the downstream consumption in the Asian market in the first half of January 2024, was affected by the muted downstream market transactions amid a slow economic recovery.  Ahead of the Lunar New Year holiday, downstream markets in Asia are displaying a varied pattern, as PVC prices experience a stable due to pre-holiday restocking and supply constraints. This occurs against the backdrop of an overall subdued demand.

As per ChemAnalyst, PVC prices in the Asian market are expected to exhibit a slow rebound in the coming weeks as the pre-holiday restocking has to begin and producers already witnessed constrained supplies in the second half of January 2024.