Polyvinyl Chloride (PVC) prices have continued to decline in the Asian market during the week ending July 5, 2024. The PVC prices showed a decrease due to slow downstream demand in the construction sector and ample availability of stocks. The input costs continued to ease in the Asian market amidst low-cost pressure with decreasing upstream Ethylene prices. From the supply perspective, shipping companies cited the increasing complexity of the situation in the Red Sea and its ripple effects on global supply chains as the reason for the surcharge.

Last week, upstream Ethylene prices experienced a decline in certain parts of Asia, while remaining steady in other regions. The upstream Ethylene price discussions had thinned with curtailed steam cracker run rates further limiting the scope for spot transactions in the PVC market. The steam cracker operations in South Korea have ebbed slightly in July compared to June due to negative margins. The regional purchase pulse in the construction industry continued to remain muted in the PVC industry.

There is little enthusiasm for high-priced replenishment, and downstream companies are adopting a wait-and-see approach. Consequently, the spot market is expected to experience narrow fluctuations in the short term. Recent declines in the regional PVC market are significantly impacted by the upstream sectors, including Ethylene production. The consistent decrease in upstream ethylene prices has also increased downward cost pressures on the PVC market throughout June 2024.

The upstream ethylene market in Asia remains in a state of flux, with price fluctuations and operational adjustments continuing to shape the PVC market landscape. The company has restarted its cracker in early July 2024. The cracker, located in Pengerang, Malaysia, has an ethylene production capacity of 1.2 million mt/year and was shut down for maintenance at the end of June 2024.  The company is likely to take its cracker offline for maintenance in early August 2024. Further details on the duration of the shutdown are not available yet. The cracker, located in Yulin, Shaanxi in China, has an ethylene capacity of 800,000 mt/year.

As per  ChemAnalyst, Future attention on PVC prices will be directed towards the terminal real estate market and financial conditions. In certain areas of the South China market, rainfall and consistent demand have led to average shipment levels. While supportive real estate policies have increased future demand expectations for PVC in Asia, global construction demand has not significantly improved to impact the PVC industry in the short term. Initial market responses have been weaker than anticipated. Several PVC pipe manufacturers attribute this low inquiry period to a shortage of new projects and the onset of the monsoon season.