In October 2024, the Asian Polyvinyl Chloride (PVC) market experienced a downturn, shifting from a Chinese post-holiday rally, initially supported by the futures market, to a subsequent decline as demand fundamentals weakened. The brief upward momentum seen in the spot market last week, driven by optimism in futures trading, quickly dissipated. By the start of this week, PVC prices reversed course, entering a downward trend.

Several factors contributed to this decline in the PVC market. Most notably, the PVC futures market showed signs of weakening this week, influencing the spot market, which faced increased pressure from a growing supply surplus. The operating rates among manufacturers rose in October, with over half of the production facilities running at full capacity, exacerbating shipment pressure. Dealers responded to the mounting inventory by offering lower prices, leading to a drop in the PVC market offers.

Meanwhile, the PVC demand on the downstream side remained lackluster, with procurement largely centered on immediate spot needs. There was little appetite for inquiry-based buying, and the overall market sentiment was sluggish, with trading activities primarily driven by essential purchases.

The Calcium Carbide market, a key raw material for PVC production in China, also showed mixed dynamics. After a period of weakness in September, calcium carbide prices rebounded in early October. However, the raw material prices have fallen since the start of the month, and with the PVC market softening, further price fluctuations in calcium carbide are likely.

The PVC supply remains ample in the short term, with both enterprise and market inventories sitting at elevated levels. On the cost side, calcium carbide prices are not expected to provide significant support, given the lack of upward momentum. Additionally, the weak performance of the PVC futures market has dampened confidence in the spot market, adding to the overall bearish outlook. Additionally, Drewry's Intra-Asia Container Index (IACI) fell by 15% during the first two weeks of October, hitting a seven-month low at USD 500 per 40ft container, with spot rates on certain intra-Asia routes plunging by over 30% in just two weeks. The IACI, which is a weighted average of spot rates across 18 key lanes within Asia, has now declined for six consecutive fortnights, down from a peak of USD 1,025 per 40ft container in early July. Drewry anticipates the downward trend to persist into the second half of October.

As per ChemAnalyst, the short-term forecast for the PVC market in Asia remains weak and volatile, with market participants anticipating potential developments that may impact future PVC price movements.