For the Quarter Ending September 2024
North America
In the third quarter of 2024, the North American Vinyl Chloride Monomer (VCM) market experienced relative price stability, shaped by a combination of supply chain disruptions, fluctuating feedstock costs, and subdued demand from the downstream PVC sector. Throughout this quarter, the VCM market contended with decreased consumption linked to a slowdown in the construction industry and weaker export markets, which collectively exerted downward pressure on demand.
The feedstock market for Ethylene presented a notable dynamic during this period. While Ethylene prices experienced an uptick in the early part of the quarter, they fell in September, highlighting the inherent volatility of the upstream market. This fluctuation in Ethylene prices played a critical role in influencing VCM pricing. Despite the initial rise in Ethylene costs, the overall VCM prices remained stable, primarily due to competitive pressures from the PVC industry, which has faced its own set of challenges. Moreover, the region encountered significant supply chain disruptions caused by hurricanes and plant shutdowns. These operational challenges further complicated the market dynamics, contributing to the steady prices observed despite the unfavorable conditions.
The balance between rising feedstock costs and softening downstream demand created an environment where the opposing market forces effectively offset each other, leading to overall stability in VCM pricing. In summary, the third quarter of 2024 showcased a complex interplay of factors that allowed the VCM market to maintain stability despite significant external pressures and shifting dynamics in the upstream and downstream segments.
Asia
The third quarter of 2024 in the APAC region witnessed a significant increase in Vinyl Chloride Monomer (VCM) prices, with multiple factors influencing this uptrend. Plant shutdowns, such as those at Tianjin Bohai Chemical Development Company in China due to an explosion, and at Sinopec Qilu Petrochemical Corporation in Zibo, Shandong due to a major fire, disrupted supply chains, leading to supply constraints. These disruptions, coupled with force majeure situations like the one at Thai Plastic and Chemicals in Thailand due to a fire, further exacerbated the limited availability of VCM in the market. The overall pricing environment for VCM in the region showed a 6% increase from the previous quarter, with a 1% price difference between the first and second halves of the quarter. In India, which experienced the most significant price changes, the quarter ended with VCM priced at USD 707/MT CFR Tuticorin. The pricing environment in India has been marked by a stable to positive trend, driven by the supply-demand imbalances caused by the plant shutdowns and force majeure events, highlighting the challenges faced by the VCM market players in the region.
Europe
In the quarter ending September 2024, the European Vinyl Chloride Monomer (VCM) market exhibited a largely stable pricing environment, influenced by several interrelated factors. The market was primarily characterized by weak demand from the downstream plasticizer industry, which has been affected by a sluggish construction sector across the Eurozone. This has resulted in only modest growth in the new housing segment, further dampening the demand for VCM. Despite these challenges, the overall supply levels remained adequate, contributing to a balanced market dynamic that limited significant price fluctuations throughout the quarter. Notably, Germany experienced the most pronounced price changes. However, overall VCM prices remained steady due to a combination of constrained supplies and ongoing supply chain disruptions, including port strikes and flooding, which have exacerbated operational difficulties. The lackluster demand from various downstream industries, particularly the plasticizer sector, placed downward pressure on VCM prices. However, this bearish sentiment was mitigated by supply constraints, allowing for a relatively stable market atmosphere. Furthermore, the stability in upstream Ethylene costs has also played a critical role in maintaining price equilibrium. Overall, while the European VCM market faced challenges from weak downstream demand and external disruptions, the interplay between supply constraints and increased upstream Ethylene costs resulted in minimal price movement during the third quarter of 2024, reflecting a cautious but steady market sentiment.
MEA
In the quarter ending September 2024, the Vinyl Chloride Monomer (VCM) pricing in the MEA region witnessed a stable trend, with Qatar experiencing the most notable price changes. The market was influenced by various factors leading to decreased prices during September 2024. Supply disruptions, operational challenges, and high production costs contributed to the mixed VCM price trend. The global ocean freight market faced significant challenges, impacting the VCM supply chain and leading to reduced capacity and higher charter rates. Additionally, geopolitical tensions and economic factors further complicate the trading environment, causing price reductions. Qatar, specifically, saw a decrease in demand from the PVC industry and limited supplies, resulting in a decrease in prices. Overall trends indicated a negative sentiment, with a 3% decrease from the previous quarter and a 1% price comparison between the first and second half of the quarter. The quarter-ending price for VCM in Qatar stood at USD 623/MT, reflecting the prevailing decreasing pricing environment. Plant shutdowns during the quarter included disruptions at key facilities.
For the Quarter Ending June 2024
North America
In Q2 2024, the North American market for Vinyl Chloride Monomer (VCM) experienced a notable increase in prices, driven by constrained supply and heightened input costs, particularly due to limited inventories and rising crude oil prices, which reached a two-month high. Additionally, severe weather conditions, including the hurricane season and floods, disrupted industrial demand and production rates, further tightening supply chains. The combined effects of these disruptions, along with a shortage of containers and logistical challenges, fueled an upward trajectory in VCM prices.
Focusing on the USA, the country experienced the most significant price fluctuations within the region. Seasonal factors, such as the hurricane season, exacerbated supply constraints, leading to an increase this quarter. The pricing environment was further strained by robust domestic demand in the PVC industry and export opportunities, particularly in Africa and Asia, as buyers sought alternatives to mitigate supply gaps.
This upward trend reflects a positive pricing environment, driven by high input costs, robust demand, and constrained supply, underscoring the persistent inflationary pressures within the PVC market in North America during Q2 2024.
APAC
During Q2 2024, the Vinyl Chloride Monomer (VCM) market in the APAC region experienced stability in prices, primarily driven by several critical factors. A surplus in regional supply, coupled with declining upstream Ethylene prices, exerted downward pressure on VCM prices in the middle of the quarter. Additionally, a series of plant shutdowns severely impacted market dynamics at the end of Q2 of 2024. For instance, Kaneka’s plant in Takasago, Japan, experienced a force majeure due to a power outage, resuming operations only in mid-May. Similarly, unscheduled shutdowns plagued Hanwha Solutions Chemical Division in Ningbo, China, due to floods, and Tianjin Bohai Chemical Development Company in Tianjin, China, following an explosion. These disruptions, while reducing supply temporarily, could not counterbalance the overarching oversupply and eased production costs, thereby perpetuating the price stability amid moderate PVC demand. In India, VCM prices reflected the maximum volatility within the APAC region. The overall trend showcased a steady decrease, influenced by seasonal procurement behaviors and fluctuating consumer confidence in the real estate sector. Despite the bullish downstream PVC sector, ample inventories and moderated demand led to cumulative price stability for the time being. By the end of Q2 2024, the VCM prices settled at USD 672/MT CFR Tuticorin, marking the quarter as stable in terms of pricing.
Europe
In Q2 2024, the VCM market in Europe experienced a marginal decrease in prices. This decline was driven by several key factors, including subdued domestic demand within the PVC industry, and intensified competition among regional sellers. Additionally, the economic outlook remained uncertain, exacerbating the bearish market sentiments. The upstream cost pressures, especially from ethylene, eased somewhat but were insufficient to buoy VCM prices. Shipping disruptions and logistical challenges further compounded the market's instability, causing many producers to reduce output rates. Focusing on Germany, where the most significant price changes occurred, the market dynamics closely mirrored the broader regional trends. German VCM prices fell sharply, influenced by a combination of high production costs and weak downstream demand, particularly from the PVC industry. The quarter-ending price stood at USD 925/MT for downstream PVC Suspension Calendering Grade K57 FD Vreden, underscoring the bearish market sentiment that has dominated the VCM market during this period. Overall, the pricing environment for VCM in Germany during Q2 2024 has been marginal negative, driven by structural market weaknesses and supply-related disruptions.
MEA
The second quarter of 2024 has seen stability in the Vinyl Chloride Monomer (VCM) prices across the Middle East and Africa (MEA) region. The downward trend in May 2024 is influenced primarily by an oversupply situation and a decline in upstream crude oil prices. The price decrease is further exacerbated by adequate inventory levels and weakened support for high Ethylene prices. Regional markets have experienced increased competitiveness, particularly from Asian countries like South Korea and China, where VCM prices have continued to decline. Compounding these challenges were sustained reductions in production rates and container shortages, which further tightened the supply chain. Focusing on Saudi Arabia, the region witnessing the most substantial price flux, these dynamics were particularly pronounced. The overall trend has been bearish, driven by moderate to high supply levels and a moderate demand environment during May 2024. This coincided with a Force Majeure event at the Qatar Vinyl Company (QVC) in Mesaieed, which halted operations for three days in April due to floods, temporarily disrupting supply and increasing prices of VCM. The pricing environment remained stable, with the latest quarter-ending price at USD 615/MT for VCM FOB Hamad in Qatar.
For the Quarter Ending March 2024
North America
In the first quarter of 2024, there was a period of rising prices for Vinyl Chloride Monomer (VCM) in the North American region. Various factors influenced market prices during this time.
Firstly, there was a surge in demand from the downstream PVC sector, fueled by infrastructure development projects and increased manufacturing activity. However, a concerning development was the collapse of Baltimore's Francis Scott Key Bridge, raising concerns about the smooth movement of the product in the United States. This incident occurred at a precarious time when tank supplies in the region were already strained due to unfavorable weather conditions.
During this quarter, there was a focus on consumer inflation data in the United States, especially following a strong payroll employment report indicating a robust labor market. At that time, interest rates were in a contractionary phase, aiming to slow down economic expansion. Moreover, the exported value of downstream PVC dipped by 5.2% during January 2024, indicating a surge in downstream inventory levels. The pricing environment for VCM in the North American region during Q1 2024 was positive, with rising prices driven by increased downstream PVC demand and supply constraints.
APAC
The first quarter of 2024 was challenging for Vinyl Chloride Monomer (VCM) prices in the APAC region. The market experienced a mix of factors that influenced prices. Overall, there was a slight decline in prices compared to the same quarter last year. This was attributed to weak demand in the downstream PVC industry, resulting in sluggish consumption. Additionally, the VCM market faced uncertainties due to plant outages and disruptions in supplies. In India, there were significant price changes in the VCM market. Prices remained stable in February, primarily due to limited regional supplies and a scarcity of available stock. However, in January, prices experienced a pause, supported by stable downstream PVC demand and limited supplies. The market was balanced, with moderate supply and demand. Looking at the overall trend in the quarter, prices saw a decline of 2.9% compared to the previous quarter in 2024. This decline was attributed to subdued demand in the downstream PVC industry and the narrowing gap between supply and demand. The quarter-ending price for VCM in India was USD 669/MT CFR Tuticorin. In conclusion, the pricing environment for VCM in the APAC region was negative in the first quarter of 2024. Weak demand in the downstream PVC industry and disruptions in supplies contributed to the decline in prices. However, the market remained balanced with moderate supply and demand.
Europe
The recent increase in VCM (Vinyl Chloride Monomer) prices in the European market during the quarter ending March 2024 reflected moderate demand and a scarcity of suppliers. Challenges faced by the European VCM supply chain, including logistics disruptions linked to the Red Sea turmoil, contributed to the current pricing trend. Downstream production rates decreased due to supply disruptions, leading market participants to take a cautious stance on further changes. Limited VCM supplies in the German domestic market were notable despite low downstream PVC demand fundamentals amidst slowed construction activities. Global crude oil prices surged, surpassing USD 87 per barrel, driven by factors like tighter physical markets, OPEC+ production cuts extension, and geopolitical tensions. However, VCM prices in the German market remained stagnant, with a narrowed demand-supply gap and limited stock availability amid rising input costs in the middle of the quarter. Supply concerns emerged in March 2024 as the Easter holidays approached, particularly focusing on German ports facing closures during weeks 13 and 14 due to the holidays. Moreover, the export value of downstream PVC increased by approximately 27% in January 2024, indicating a shortage of inventories in the line of production rate cuts further escalating VCM prices this quarter.
For the Quarter Ending December 2023
North America
In the fourth quarter of 2023, the North American Vinyl Chloride Monomer (VCM) market experienced a decrease in prices. This quarterly decline was influenced by diminished demand from downstream Polyvinyl Chloride (PVC) manufacturing sectors and abundant supplies.
The limited VCM demand in the USA's PVC industry was a result of a slow economic recovery and stagnant trading conditions in the construction segment. The quarter-ending price for PVC FOB Texas in the USA reached USD 679/MT. In anticipation of a price hike due to a new import tariff, buyers temporarily suspended their purchasing activities during this period. Additionally, international factors, such as the Russia-Ukraine war and a drought affecting the Panama Canal, added complexity to the USA's international container logistics in the final quarter of the year.
In response to a substantial drop in spot export prices compared to contracted prices, US buyers were engaged in active discussions regarding potential reductions in VCM prices. The disruptions in US shipping caused by Panama Canal issues and the ongoing decline in crude oil values also played a role in influencing pricing dynamics in the North American VCM market during this timeframe.
Asia
The fourth quarter of 2023 presented challenges for the Vinyl Chloride Monomer (VCM) market in the APAC region. The market encountered several significant factors that influenced prices and market dynamics. Initially, there was a restricted supply of VCM, leading to heightened competition among buyers. This limited supply stemmed primarily from plant shutdowns, including the maintenance plant shutdown at Formosa Plastics Corporation in the USA, resulting in a reduction in VCM production capacity. Secondly, VCM demand ranged from moderate to high, driven by seasonal consumption in the construction and packaging industries in October 2023. The festive season in India, in particular, contributed to increased procurement activity. However, the VCM market faced subdued demand in the downstream PVC industry across the Asian market during December and November 2023 driving down the VCM prices. The prevailing downstream production uncertainty dampened earlier expectations of an upswing in demand, resulting in sluggish consumption in the domestic market. As a consequence, VCM sellers grappled with narrow profit margins in the terminating quarter of 2023. Traders acquired purchases at reduced prices, and the overall transaction scenario remained unsatisfactory. Additionally, there has been a significant drop of over 3% in international crude oil futures. The most recent price of Vinyl Chloride Monomer (VCM) CFR Tuticorin in India for the current quarter was USD 660/MT in December 2023.
Europe
The VCM prices in the European market showed a decline in the fourth quarter of 2023. The European VCM traders and manufacturers were predominantly concentrated on the diminished demand from the downstream PVC industry. This focus has led to only modest price fluctuations, despite worries about disruptions in freight at the termination of the quarter. The prolonged transit time for imports was a significant factor, as noted by a resin producer. Another significant factor was the adequate availability of inventories, which further impacted the prices negatively. Germany saw the most significant changes in prices, with a bearish trend in most of 2023. The strategy of reducing operating rates to protect profit margins for producers and traders proved insufficient for suppliers to boost margins, given the competitive pressures from the import market. Despite production cutbacks, VCM supplies consistently struggled due to low PVC demand in Q4 of 2023. The European VCM market notably outperformed its global counterparts, leading import suppliers to redirect shipments to the region during the global market downturn in November 2023.
