PVC Prices Soar in APAC and North America, While European Market Faces Challenges in July 2023

At the termination of July 2023, Poly Vinyl Chloride (PVC) prices showed an upward trend in the APAC and North American region, unlikely to drop in the European market. The recent rise in PVC prices was driven by supply disruptions and improving demand from the downstream industries in the US and APAC markets. On the European demand side, the construction demand was prompted by the decline in the region's housing demand and uplifting interest rates by the European Central Bank. However, the polymer prices in Asia and Europe were concluded by the decreasing inventory availability amid a reduction in the production run rates and supply shortages in improving demand fundamentals in the week ending July 28, 2023.

In Asia, PVC prices experienced an increasing trend backed by improvements in the overall market trading situation and a rebound in downstream demand, particularly in the construction and packaging sectors. Both domestic and overseas demand contributed to the price surge while limiting product availability. Additionally, higher costs of the feedstock Calcium Carbide in the Chinese market, in line with the rising crude oil prices, put pressure on input costs, further impacting the trajectory of PVC prices. Meanwhile, the reduction in production run rates and plant maintenance shutdowns at Suzhou Huasu (with 130,000 mt/year total capacity) and Shanghai Chloro Alkali (with 100,000 mt/year total capacity) contributed to the limited availability. Moreover, traders sought to capitalize on the improving economic growth in China and rising export offers for PVC by increasing profit margins.

Similarly, the PVC prices surge in the US market has resulted from supply shortages. As per the ChemAnalyst insights, a prolonged feedstock Vinyl Chloride Monomer (VCM) outage at Olin's Freeport, Texas, complex continues to cut the supply of PVC and threatens US export volumes, providing some uplift to product prices. In the recent week, a legal battle that unfolded, chemical manufacturer Olin Corporation pushed back against a demand made by Shintech, its subsidiary's client, for the delivery of feedstock VCM to Shintech's production unit in Freeport, Texas of PVC. The courtroom confrontation between Olin and Shintech's subsidiary has escalated tensions over the supply of VCM, which plays a crucial role in producing PVC. As the legal battle continues, the industry and market stakeholders closely watch the developments that may have implications for both companies' operations and the wider chemical sector in the region.

However, the European PVC prices followed a contradictory trend and fell throughout July 2023, owing to the persistently sluggish demand from the downstream construction sector of the region. The decline in the downstream inquiries was caused by the rising interest rates, dampening consumer confidence in the regional market's housing segment, and a weakening of economic conditions. Moreover, the competitiveness in the global market rose amidst the opening of the Chinese market.

As per the ChemAnalsyt, the PVC price trend is anticipated to increase worldwide for a short time frame due to an escalation in demand from the downstream construction industry and slowed-down production run rates. Besides, European PVC prices might follow a downward trajectory due to the decline in downstream demand and piled-up stocks in the coming weeks.