Vinyl chloride monomer Prices, markets & analysis
If you buy or sell Vinyl chloride monomer or related products, you need up-to-date global pricing data and the background information to help you understand it.
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Vinyl Chloride Monomer Overview Transcript
Vinyl chloride monomer, also known as VCM, is an intermediate in polyvinyl chloride (PVC) production and is largely integrated, with only a small merchant market outside of contract agreements.
About 99% of VCM is used in the production of downstream PVC, which is the main driver of VCM prices.
Other drivers include movements in ethylene and chlorine costs as well as events in the wider chlor alkali chain, as producers need to balance the electro chemical unit in order to make the business profitable.
The economy is also a key driver for VCM consumption, as the PVC market is strongly linked with construction activity and GDP.
In the global VCM market, trading activity has depended on the outcome of PVC negotiations, which have been largely unsuccessful for producers, as poor conditions in the construction market continue to cap potential increases and producers’ efforts to pass higher ethylene costs.
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Vinyl chloride monomer: Market overview
Through the middle of 2013, activity in the global vinyl chloride monomer (VCM) market showed some improvement over a lacklustre 2012, as demand for downstream polyvinyl chloride (PVC) has generally picked up in most regions.
Throughout 2012, activity in the VCM market was characterised by slow demand from the PVC market and high feedstock ethylene costs. In the US, the long-simmering rebound of the home-building industry has shown signs of finally taking hold, following the sharp downturn that helped lead to the financial crisis of 2007-09. While still uneven, most indicators show that home construction, one of the key consumer segments for PVC, is on the way to sustained recovery in the US, albeit not at the levels seen before the crisis.
Europe, too, recently has shown some improvement in the market for PVC, after a long period of weak demand in the midst of ongoing financial and recessionary problems in the eurozone.
In Asia, key market China continued to observe lacklustre demand as uncertainty over the near-term outlook for downstream PVC weighed on VCM buyers’ confidence. Despite this, Asian VCM prices were supported by limited spot supply – because of reduced operating rates brought about by high electricity costs during the summer season and forthcoming turnarounds.
Southeast Asia saw more active enquiries and discussions, but a persistently wide gap in buying and selling indications weighed on trading activity.
Updated to mid-August 2013
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About Vinyl chloride monomer
Vinyl chloride monomer (VCM) is a colourless gas with a characteristic mild, sweet odour. A toxic and hazardous material, vinyl chloride has been classified as a group A, human carcinogen.
VCM is used almost exclusively in polyvinyl chloride (PVC) manufacture. PVC itself is highly dependent on the construction market, which reflects the ups and downs of the world economies.
With the exception of China, nearly all production is now based on ethylene, which is first reacted with chlorine to make ethylene dichloride (EDC). The EDC is then converted to VCM by thermal cracking. In China, the dominant process to make VCM is based on acetylene produced from calcium carbide which is manufactured from coal and limestone.