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Domestic PVC prices have remained weak since the decline began in September. As of November, the market has not shown any improvement, and prices remain at a low level. In East China and South China, the price of calcium carbide-based PVC is between 6,300 to 6,400 yuan per ton, while ethylene-based PVC is priced between 6,500 to 6,800 yuan. Trading volumes are light, and prices continue to fall.
The sluggish performance of the domestic PVC market can be attributed to five main factors:
First, there has been a sharp rise in production. According to statistics, from January to October, domestic PVC output exceeded 5.3 million tons. In October alone, monthly output surpassed 600,000 tons. This year, total domestic PVC production is expected to exceed 6.5 million tons. According to the latest data from the China Chlor-Alkali Industry Association, domestic PVC production capacity will reach 9.72 million tons this year and surpass 13 million tons next year, making China the world’s largest PVC producer. Although some companies reduced output in October due to maintenance, the impact was minimal compared to overall production, and it did not significantly ease the oversupply issue. The growing supply is expected to have more negative effects on the market in the future.
Second, downstream demand has been gradually shrinking. With colder temperatures in winter, the operating rates of downstream enterprises in the northeast, northwest, and northern regions have declined, leading to a further drop in PVC demand, which is almost approaching zero. As a result, supply from the north is mainly flowing south, putting pressure on the southern market and increasing sales challenges. With the implementation of macroeconomic regulations, especially in real estate-related industries, the impact has been significant. The skyrocketing copper prices have also affected the wire and cable industry, reducing PVC demand. In the current economic environment, the petrochemical sector is not booming, and the imbalance between upstream production and downstream demand continues to weigh on the market, resulting in falling prices.
Third, the price of raw material calcium carbide has dropped. Domestic calcium carbide supply is largely oversupplied. The decline in calcium carbide prices has led to lower PVC prices, and the surplus inventory of calcium carbide has further accelerated the downward trend. The lowest price in the northwest region is close to 1,800 yuan. In August, due to environmental inspections and rising electricity costs in the northwest, calcium carbide prices increased temporarily. However, as inspections ended and prices stabilized, production resumed, and supply eased, leading to another price drop with a continued downward trend. Meanwhile, foreign VCM offers are around $650 per ton, but this is still far from the $600 mark that domestic companies are willing to accept, making transactions difficult. With calcium carbide-based PVC prices declining, ethylene-based PVC could not support the market, leading to further price drops.
Fourth, the chemical industry's economic cycle plays a role. Cyclical trends in the economy also affect the chemical sector. At the end of October, the China Chemical Industry Business Cycle Summit was held in Beijing, where experts analyzed the petrochemical industry’s business cycle. The chlor-alkali industry is no exception and is also influenced by these cycles. Industry insiders believe that the PVC industry typically follows a 4–5-year development cycle, and after reaching a peak last year, it has started to decline this year.
Fifth, poor logistics and transportation bottlenecks have also contributed to the market weakness. The northwestern production areas have long faced difficulties in transporting goods to the south, which has hindered PVC distribution. As PVC production increases in the future, logistics will become even more critical. When downstream demand cannot keep up with upstream growth, the market tends to weaken. Currently, the PVC market is entering a phase of restructuring and industrial adjustment, and prices are expected to remain low for some time.