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    Home > Chemicals Industry > International Chemical > Global PVC demand and prices both declined

    Global PVC demand and prices both declined

    • Last Update: 2022-10-25
    • Source: Internet
    • Author: User
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    Since 2021, global demand for polyvinyl chloride (PVC) has risen
    sharply not seen since the 2008 global financial crisis.
    But by mid-2022, PVC demand is cooling rapidly and prices are falling
    because of rising interest rates and the highest inflation in decades.

    In 2020, in the early months of the global coronavirus pandemic, demand for PVC resins used to manufacture pipes, window and door profiles, vinyl siding and other products fell
    sharply due to a slowdown in construction activity.
    S&P Global Commodity Insights data shows that in the six weeks to the end of April 2020, the price of PVC exported from the United States plummeted by 39%, while the price of PVC in Asia and Turkey also fell by 25%~31%.

    By mid-2020, PVC prices and demand rebounded rapidly, maintaining a strong growth momentum
    through early 2022.
    Market participants said that from the demand side, remote home office and children's home online education have promoted the growth of PVC demand for
    houses.
    On the supply side, for most of 2021, high freight rates for Asian exports made Asian PVC uncompetitive to enter other regions, the United States reduced supply due to extreme weather events, the disruption of multiple production units in Europe, and the continuous rise in energy prices, which significantly raised production costs, causing global PVC prices to rise
    rapidly.

    Market participants had predicted that PVC prices would return to track in early 2022, and global PVC prices would slowly fall.

    However, factors such as the escalation of the Russia-Ukraine conflict and the epidemic in Asia have had a profound impact on PVC demand, and global inflation has triggered higher prices for basic necessities such as food and energy, as well as rising global interest rates and fears
    of recession.
    After a period of rising prices, the PVC market demand began to be curbed
    .

    In terms of the housing market, according to Freddy Mark of the United States, the average interest rate of 30-year fixed mortgages in the United States reached 6.
    29% in September, higher than 2.
    88% in September 2021 and 3.
    22%
    in January 2022.
    Stuart Miller, executive chairman of Lennar, the second-largest homebuilder in the United States, said in September that mortgage rates have now more than doubled, doubling monthly payments, reducing home buyers' loan affordability, "greatly impacting" the U.
    S.
    housing market, and is bound to curb PVC demand
    for construction at the same time.

    In terms of price, the PVC markets in Asia, the United States and Europe are basically separated from
    each other.
    As freight rates fell sharply and PVC in Asia regained its global competitiveness, Asian producers began to lower prices to compete for market share
    .
    U.
    S.
    producers also responded with price cuts, prompting PVC prices in the U.
    S.
    and Asia to start falling
    first.
    In Europe, due to persistently high energy prices and potential energy shortages, the price of PVC products in Europe is higher than before, especially because of the potential shortage of electricity, resulting in a decline
    in PVC production from chlor-alkali industry sources.
    However, the fall in PVC prices in the United States may open an arbitrage window to Europe, and European PVC prices will not get out of control
    .
    In addition, PVC demand in Europe has also declined
    due to the economic downturn and logistics congestion.

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