The Asian PVC Market Continues to Grapple with the Ongoing Downward Trend

In the first week of September 2024, the PVC (Polyvinyl Chloride) spot market in Asia continued to exhibit a consistently weak performance, with prices experiencing fluctuations and a steady decline. The downward trend was largely influenced by the persistent slump in the futures market, which set the tone for the broader PVC market. Following the futures trajectory, the spot market came under significant pressure, exacerbated by an imbalance in supply and demand. As a result, the market struggled to escape the prevailing downward channel.

In China, despite a brief rebound in the latter part of August 2024, driven primarily by short-term operational cuts at the PVC production facilities and a temporary rise in prices, the market swiftly returned to its weakened state by month-end. At present, there are no clear signals indicating a bottoming out or stabilization of prices this week. Asian downstream buyers, meanwhile, have adopted a cautious approach, focusing on immediate spot purchases with minimal interest in forward buying. The overall trading environment remains subdued, with low inquiry levels and sluggish market sentiment. Transactions continue to be motivated by fundamental requirements, and market activity remains tepid, reflecting the ongoing challenges in the PVC industry.

In Southeast Asia, market sentiment remained under pressure due to an oversupply of material from China and the ongoing seasonal slowdown. Supply factors played a key role in shaping buyer decisions in several Southeast Asian countries, including Malaysia and Thailand, despite the accelerated GDP growth in these regions in August 2024. The restocking activity was irregular, with buyers opting for lower price levels week by week. Meanwhile, some producers adjusted their offers in an attempt to stimulate buying in the sluggish market environment.

As a result, the PVC prices witnessed a decline across Southeast Asia. By the week ending September 6, 2024, domestic PVC prices in Indonesia registered fresh drops, following a period of relative stability. Meanwhile, PVC markets in Thailand and Vietnam saw continued price dip, maintaining a downward trend for another consecutive week. Despite the strengthening of local currencies across Southeast Asia, PVC prices continued to fall in US dollar terms for the time being.

As per ChemAnalyst, the supply-demand fundamentals for PVC are expected to remain weak, with ample supply and ongoing pressure on both fronts. On the cost side, crude oil and Ethylene prices are subdued, providing only moderate cost support. In the futures market, PVC has shown lackluster performance in the later stages, which has dampened confidence in the spot market, resulting in a generally bearish sentiment. In the short term, the PVC spot market is expected to continue fluctuating and consolidating within a defined range.