PVC Buying Activity remains Limited due to Weak Demand Recovery Across the US and Asia

Texas (USA): The buying activity in the PVC (Polyvinyl Chloride) market has shown signs of restraint in the Asian and US markets due to a sluggish recovery in downstream demand, particularly in China's real estate sector. This trend has been compounded by converters maintaining comfortable material supplies, resulting in subdued enthusiasm for purchases and a cautious approach among investors.

According to a trader based in China, the subdued demand for PVC was attributed to the absence of new real estate and infrastructure projects. Purchases are now primarily made on an as-needed basis, reflecting the prevailing market conditions. Despite the possibility of scheduled maintenance turnarounds in China offering a glimmer of hope by potentially reducing the availability of Chinese cargoes, an oversupply situation persists due to tepid demand and ample stockpiles in warehouses.

Asian PVC traders have emphasized the significant availability of PVC within the country, dissuading imports. The weak procurement sentiments were echoed by local buyers who were prioritizing clearing domestic stocks before considering imports, contributing to the prevailing PVC market dynamics. Market discussions suggest that a major producer is yet to fully allocate its March inventory across Asian markets, further dampening buyer enthusiasm.

The producers had previously offered discounts in March deals in Vietnam to stimulate sales, indicating persistent challenges in the market despite price adjustments. Traditionally, Taiwanese producers have set benchmarks for PVC pricing in Asian markets. However, recent developments indicate a departure from this trend, with some Chinese producers opting to maintain stable export prices amidst unfavorable supply-demand dynamics.

 Furthermore, initial expectations of lower April offers led to minor price corrections in Southeast Asia. However, weak PVC demand in the downstream construction industry has cast doubt on the sustainability of these adjustments, with uncertainties surrounding potential upward price revisions given the prevailing market conditions.

Similarly, the US PVC market maintained a relatively downward pricing trend towards the termination of March 2024, with no recent significant improvement noted in downstream real estate sector demand. The stability in PVC prices in the previous weeks was supported by a decrease in upstream Ethylene prices, ensuring satisfactory cost support. International crude oil futures experienced a decline in mid-March 2024.

The main WTI crude oil futures contract in the United States marked a decrease of 0.3%. Similarly, the main contract for Brent crude oil futures reflected a decrease of 0.2%. As per ChemAnalyst, PVC prices are likely to be impacted by pessimistic construction sector demand in the short term in the US and Asian markets. In summary, the PVC market will continue to navigate challenges stemming from subdued demand in the Asian real estate sector and oversupply concerns, prompting cautious buying behaviors across the globe. Moreover, the US PVC price trend is expected to be impacted by stability in downstream demand and also high operational costs along with the volatility in upstream crude oil costs.