Mixed Prospects for Asian PVC Markets as Costs Rise Amidst Supply Concerns Loom

The Asian Polyvinyl Chloride (PVC) market faced a complex landscape at the start of March 2024 as elevated costs and subdued demand in the downstream construction industry escalated the concern amongst the PVC market participants. The high production costs were driven by factors such as Brent crude futures exceeding USD 80 per barrel and a significant surge in the upstream Ethylene prices over the past two months. Despite these bullish signs on the cost front, concerns regarding the supply side, particularly originating from China, threaten to hinder a sustained upward trend in the line of low PVC regional inquiries.

In China, the lingering slump in China's property sector has led to sluggishness in the PVC market and also resulted in abundant export availability. In terms of production, China does not anticipate any major issues, with minimal maintenance turnarounds reported in March 2024. In March 2024, Yichang Hubei Province with a total PVC production capacity of 10000 TPM, and Wanhua Chemical Corporation with a total PVC production capacity of 33333 TPM scheduled maintenance shutdowns for 11 and 8 days respectively.

However, downstream units are expected to resume operations after the Spring Festival, potentially boosting domestic demand. Following a Taiwanese major's price hikes for March, Chinese sellers also increased their offers. Despite these hikes, Chinese PVC prices being offered to the Indian market have not witnessed significant reductions. Sellers maintained confidence in the robust cost-side support for PVC prices.

The recent analysis reflects that import PVC markets in India, China, and Southeast Asia are currently trading at four to six-month highs. A Chinese trader anticipates a volatile trend in the Chinese market in the near term, while a producer notes that domestic supplies remain ample, and downstream purchases are still limited.

Southeast Asian markets display a similar pattern, with support from rising upstream crude oil and feedstock prices for March by the major producers of Taiwan. However, resistance from buyers is evident. An Indonesian compounder highlights the increased demand post-holidays but notes buyer resistance to the steep hike. Southeast Asian players, cautious of weak demand for end products, largely adopt a wait-and-see approach, keeping prices stable despite the Taiwanese major's upward adjustments.

As per ChemAnalyst, The PVC market in Asia seems to be at a crossroads in the coming weeks, navigating between rising costs and supply-side challenges. While the cost dynamics favor an upward trajectory, resistance from buyers and concerns over ample supplies pose challenges to sustained market growth. Market players are closely monitoring these factors to observe the future direction of the PVC market landscape in the APAC region.