Our comprehensive Polyvinyl chloride (PVC) reports covered by our locally-based experts, help to keep you abreast of the latest market developments and make vital business decisions. The weekly ICIS price reports are published in Asia, China, Middle East/south Asia, CIS, Europe, the US and Latin America. Price assessments vary depending on the region and include spot, import, export, domestic and contract prices.
Our independent and unbiased commentary includes an overview of weekly market activity, demand and supply trends, production issues, upstream movements, graphs and economic news.
Updated to Q2 2020
Supply continued to lengthen in April in the face of a sudden demand collapse due to the coronavirus pandemic. Supply normalised later in Q2, with many producers in northeast Asia going into turnarounds during May and June. At the same time, numerous Q2 turnarounds for domestic carbide- and ethylene-based producers in China tightened supply in the country.
Spot demand was adversely impacted in April by the pandemic. Many Asian countries imposed lockdowns, limiting trade, transport and manufacturing. On the other hand, Chinese domestic manufacturing activities started to improve as the country lifted its lockdowns. Spot demand from China subsequently improved in late April. Starting from late May, demand in other Asian countries also started to improve.
PVC production fell in Q2 as producers reduced output in the face of a sharp drop in demand. A number of producers reduced capacity utilisation to between 60-75% of normal levels in the quarter. Eurochlor data also revealed that upstream chlorine capacity utilisation rates fell by 10% year on year in April and remained at similar levels in May. Lower production was counterbalanced by greatly reduced consumption.
PVC demand fell significantly in Q2 as a result of coronavirus-related lockdowns. Production in the construction industry fell by more than 28% for Europe in April, according to Eurostat. The downstream automotive industry was also virtually shut across Europe, with consumer spending decreasing and only packaging applications remaining resilient. Demand is estimated to have fallen by 30-40% for Europe in April and slowly risen later in the quarter.
Supply of PVC dwindled in Q2, amid strict lockdowns imposed by governments to stem the spread of the coronavirus. With material unable to be imported and the majority of local plants forced to shut, overall supply fell.
Demand for PVC was limited in Q2, with most activities forced to come to a complete stop amid lockdowns. While some activity in the infrastructure sector continued to take place in the Middle East, the lack of manpower and low operating rates at pipe facilities contributed to the weak demand.
Q2 supply was long as demand began to weaken alongside deteriorated economies. Strict quarantine measures, as a result of the spread of the coronavirus in the region, was one of the key factors.
Q2 demand was poor as the traditional seasonal lull was worsened by reduced operating rates and business closures across the board as a result of the pandemic.
US PVC producers throttled back chlorine and PVC production drastically in April, down by 33% from March and the lowest output of the past seven years. Supply was reduced as construction activity was curtailed in the face of the coronavirus pandemic and subsequent lockdowns and curtailment of general business activity. Production rebounded in May to recover two-thirds of that lost in April and to respond to demand recovery in the domestic and export markets.
Demand during the second quarter contracted sharply with the reduction in construction activity and the closure of many US auto manufacturing plants. Construction activity began to recover during June, but remained below normal levels, but auto production, though restarting, was slow to come back.
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PVC is produced from the polymerisation of Vinyl Chloride Monomer (VCM). It is a versatile thermoplastic with a wide range of uses including pipes & fittings, profiles, cables, flooring, films & sheets
Polyvinyl chloride (PVC) occurs as white, amorphous, odourless powder. It is soluble in nitrobenzene, cyclohexanone, and tetrahydrofuran but insoluble in vinyl chloride. It is resistant to dilute alkalis and acids but is attacked by concentrated nitric and chromic acids.
Two types of PVC homopolymer are produced: rigid resins which are inflexible and hard; and flexible resins which contain a large proportion of plasticiser to make them soft and can be stretched. Products made from rigid PVC include pipe and conduit and roofing tiles.
Flexible PVC finds outlets in wire and cable coating, flooring, coated fabrics and shower curtains. Other outlets for flexible PVC are film and sheet and flooring.
Polymerisation is normally performed at 40-70oC with the vinyl chloride monomer (VCM) in a liquid state under pressure in a batch reactor. Suspension polymerisation is the most common PVC process because the resins produced are the most versatile and suitable for a wide range of applications.
The resin produced from the polymerisation process is hard and brittle and requires conversion into a compound by the incorporation of additives such as plasticisers, modifiers, stabilisers and processing aids before conversion into finished products.
It has been a tough period for chlor-alkali producers as recent months showed a sharp downturn in margins for caustic soda. This scenario threatens to bring to an end the period of strong margins, despite some signs of a limited rebound earlier in Q4 2019. Across all major markets, calculated margins based on the co-production of caustic soda and ethylene dichloride (EDC) have weakened substantially since October 2018.
Like many others, if you are looking for ways to unveil answers to key industry questions then come and join us at the 24th World Chlor-alkali Conference organised by ICIS and Tecnon Orbichem. This 1.5 day event has been a home for key industry players in the value chain, having welcomed hundreds of delegates each year. Take a first look at the key offerings in 2020.