AFPM ’25: US PVC to face headwinds from tariffs, economy

HOUSTON (ICIS)–The US polyvinyl chloride (PVC) market is facing continued headwinds as tariff-related uncertainties persist heading into this year’s International Petrochemical Conference (IPC). The domestic PVC market is expected to grow between 1-3% in 2025 but continues to face challenges in housing and construction. Meanwhile, export markets continue to wrestle with the threat of protectionist policies and tariffs at home and abroad.

The domestic PVC market has been healthy to start the year but has been saddled with excess supply following capacity additions in late Q4. The new capacity, coupled with strong run rates, resulted in high levels of inventory to start the year. This added supply comes in contrast to a US housing market plagued by high prices and high borrowing costs.

The pressure of these variables, coupled with exceptionally cold weather, was evident in January housing statistics, where housing starts slumped 9.8% to a 1.366-million-unit pace led by a steep 13.5% decline in the multifamily segment. Despite this, production and sales remained firm in February. Production was expected to decline in March due to turnarounds by two US producers.

There was some positive economic news with 30-year mortgage rates easing in March and falling to their lowest levels of 2025 at 6.63% in early March before inching to 6.65% in mid-March. Still, current levels were well above levels considered necessary to spur demand, generally considered to be around 5.0-5.5%. Additionally, inflation appeared to stabilize in February, coming in at 2.8%, lower than the forecast 2.9% and below January levels of 3%. Despite these developments, consumer confidence remains weak.

The US PVC export market will also face its share of challenges coming primarily via protectionist policies. Potential 25% tariffs on Mexico and Canada could present challenges as the US exports significant volumes of PVC to each country and then brings back the converted goods for use in medical, building and construction, auto and industrial applications.

Reciprocal tariffs could increase the cost of these imports and dent US PVC demand. Additionally, US PVC exports face existing and potential tariff threats from a number of other trading partners including India, Canada, Mexico, Brazil and the EU.

Given the challenges in the domestic market and current growth levels, US producers will need to export more than one-third of their production to maintain operating rates in the mid-80s% range, a tall task considering adequate supply and the proliferation of tariffs and antidumping duties (ADDs).

To the south, the Latin America PVC market also faces significant challenges, with demand trends differing across key regional markets. A combination of economic pressures and the potential of US tariffs is reshaping the landscape, influencing both supply and demand dynamics.

In Brazil, PVC demand remains weak, largely due to persistently high interest rates and ongoing economic uncertainty. These factors have led to buyer hesitancy, reducing the country’s dependence on US PVC imports. The outlook for Brazil’s construction sector in 2025 presents a mixed scenario that could influence PVC market dynamics in different ways.

The Brazilian Chamber of the Construction Industry (CBIC) projects a 2.3% growth in the sector’s GDP. At the same time, Sinduscon-SP and Fundacao Getulio Vargas (FGV) have a slightly more optimistic forecast, expecting a 3.0% expansion. This growth is primarily driven by ongoing projects and newly contracted developments set to begin in the coming months, particularly in infrastructure and real estate.

However, broader macroeconomic factors may temper this momentum. The expectation of slower economic growth, higher inflation exceeding the target ceiling and rising interest rates could cool investment and business activity. If these conditions lead to tighter credit and reduced consumer confidence, demand for new real estate developments could soften, impacting the need for PVC-based materials used in construction applications like pipes, fittings and profiles.

Colombia is also experiencing economic difficulties, though the exact demand trends remain unclear. The overall sentiment is cautious, with expectations for stable-to-weak demand in the near term.

Meanwhile, Argentina faces persistent investment shortfalls in critical sectors, which continue to hinder PVC demand. This adds to the difficulties for US exporters separately aiming to maintain market share in the country.

Mexico, as a key importer of US PVC, brings in around 350,000 tonnes annually. However, the introduction of new tariffs is expected to raise costs for downstream segments that export goods to the US, which reduces the competitiveness of US exports and demand could soften.

Pricing dynamics are also likely to shift, if the additional tariff scenario among Mexico, Canada and the US changes in April, as the US Gulf PVC producers could face lower operational rates if demand from their primary export destinations declines. This could lead to production cutbacks, raising per-unit production costs.

For the Americas as a whole, uncertainty remains a prevalent theme. 2025 looks to be a challenging year and the effect of proposed tariffs from the Trump administration and retaliatory tariffs on PVC demand is unclear, with economic and inflationary factors adding further uncertainty to the 2025 outlook. Policy and economic health will continue to drive demand in 2025 and producers will need to manage production and inventories closely, control costs and target alternative outlets for exports to mitigate the risks that lie ahead.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 23-25 March in San Antonio, Texas.

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Focus article by Kevin Allen and Daniel Lopes

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