The PVC (Polyvinyl Chloride) market in Asia and Europe has recently experienced a challenging period, with prices continuing to decline amid low downstream consumption. The market has been under considerable pressure as the futures market's decline has largely been mirrored in the spot market, compounded by supply and demand dynamics.

In Asia, market participants are facing increased difficulties in moving shipments, with dealer offers consistently reaching new lows. Downstream buyers have shown limited interest in inquiry-based procurement, opting instead to focus on immediate spot prices, which has contributed to a sluggish market atmosphere. The price of pending orders remains relatively low, and overall trading activity is driven primarily by basic needs, leading to a rather subdued trading environment. On the cost side, the domestic price of calcium carbide, a key raw material for PVC production in China has been on a downward trend since July, continuing to hover at low levels in August. This ongoing weakness in the calcium carbide market has provided only moderate cost support for PVC producers in China.

Meanwhile, the European PVC Producers also struggled to expand margins amid weak downstream demand during August 2024. In August, European PVC producers faced significant challenges in their attempts to expand margins, as weak demand across the European PVC market continued to pressure pricing strategies. Suppliers have noted that sluggish end-consumer demand, particularly for high-cost items such as construction materials, remains a key obstacle, exacerbated by persistently high interest rates that limit discretionary spending. The seasonal lull in demand has also led to the temporary closure of many PVC-consuming units, with several converters shutting down operations due to a lack of orders. This PVC trend has been particularly evident as the summer holiday season progresses, especially in Southern Europe, where consumers typically conduct scheduled maintenance during this period of low activity. Sources indicate that the combination of planned and unplanned maintenance outages has been offset by the overall weak demand in August. There is not enough demand, and while some margin improvement attempts are being made by the producers, often paired with lower-priced spot volumes.

European producers are trying to increase PVC prices in August to offset the partial cost increase driven by ethylene price movement, as margins need improvement. However, the current demand in August is not supportive of these efforts.

As per ChemAnalyst, with ample PVC supply and high inventory levels at both enterprise and market levels, the market outlook remains cautious in both the European and Asian markets. The underperformance of the PVC futures market in recent stages has further dampened market confidence, leading to generally bearish sentiment in the spot market. While there has been a slight reduction in interest rates in recent months in Europe, market players suggest that more than a single rate cut will be necessary to stimulate a meaningful recovery in demand across the European PVC market.