PVC set to lead sector recovery

25 November 2002 00:00  [Source: ICB]

Polyvinyl chloride (PVC) will be in the position to drive recovery in the petrochemical sector, after going through its worst performance during the past cycle, due to oversupply and slow market growth, according to Robert Bauman of Nexant/Chem Systems.

'PVC could become one of the best businesses among commodity petrochemicals during the next year or two,' Bauman said, adding: 'With substantial consolidation occurring throughout the industry and very little new capacity coming onstream, demand for PVC will recover first in China while tight chlorine markets, lower energy prices and recovery in demand will drive growth in other areas.'

The consultancy says the vinyls chain 'looks very good' with global growth averaging 4.1%. The Asia-Pacific region, led by China, will drive growth at rates of 5.3%/year to 2010, becoming a 6m tonne market.

Major factors influencing the PVC market in the immediate future are the tightening supplies of VCM and EDC, which, according to Bauman, will become severe by 2004, together with under-investment and restructuring.

Bauman also said there is more restructuring to come. He highlights the possible merger of Vestolit and Vinnolit in Europe, which may include Norsk Hydro and create the largest PVC producer in Europe. Westlake, Shintech and Formosa could buy a share of Borden's PVC business, while there is more consolidation to come in Japan.

 

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