US PVA Market Enters November on a Stable Note Amid Subdued Demand and Construction Sector Hurdles

Polyvinyl alcohol (PVA) prices in the U.S. have remained stable during the first week of November, continuing the trend observed in recent weeks. This stability can be attributed to steady PVA inventory levels and muted demand from key sectors such as adhesives & coating which is mainly used in the construction sector. The construction sector, however, has encountered short-term difficulties due to slowed activity in commercial and institutional projects. Despite these challenges, developers are cautiously optimistic, anticipating a market rebound in 2025, driven by expected interest rate cuts from the Federal Reserve. Growth is expected in the education and public planning sectors, although the broader real estate market continues to struggle with high costs and weak demand.

In logistics, U.S. East and Gulf Coast ports, including New York, Savannah, and Houston, faced disruptions in October due to a labour strike, leading to delays and congestion. While operations have resumed following a tentative agreement, longer lead times and potential rerouting are expected to persist through the end of 2024.

On a more positive note, the U.S. retail sector experienced a strong recovery in October, with total retail sales (excluding automotive and gasoline) rising both month-over-month and year-over-year. Online and non-store sales saw a notable increase, signalling strong consumer confidence. The clothing and accessories sector also posted an annual increase, despite a slight dip in monthly sales.

In Germany, PVA prices have decreased due to stabilizing inventory levels and adjusting demand from downstream sectors. A drop in Vinyl Acetate Monomer, PVA’s feedstock prices has helped reduce production costs, contributing to the price decline. However, inflation in Germany rose in October, this development was led to lower demand from the PVA’s downstream Textile sector, driven by higher food prices and continued above-average price increases for services. The increase in energy prices had a less significant impact on inflation compared to previous months, but consumer prices still rose in October furthermore, leading to higher PVA production cost. Excluding energy, core inflation slightly decreased, with non-durable consumer goods seeing a higher price increase than durable goods. Meanwhile, the Eurozone construction activities showed slight improvement, signalling a slower contraction in sector output, although residential construction remains weak. Despite inflationary pressures, PVA prices in Germany are stabilizing, with overall market conditions supporting this trend.

As per ChemAnalyst, the prices of PVA in the U.S. are expected to rise, driven by increasing prices of feedstock Vinyl Acetate Monomer (VAM). This is likely to put upward pressure on PVA production costs. Additionally, demand from the PVA downstream adhesives and coatings industry is projected to increase. This growth is attributed to rising builder confidence, as the Federal Reserve's decision to cut interest rates is expected to boost positive market sentiment.