PVC is used most widely in construction and packaging.
The second half of 2013 saw lowered operating rates at some regional PVC facilities, especially when gains in feedstock ethylene prices exerted heavy production cost pressure on PVC makers.
Furthermore, with governmental initiatives at raising electricity costs in some parts of northeast Asia to curb excessive power consumption, many producers reduced operating rates at their units to minimise losses.
Meanwhile, the supply of PVC from deep-sea origins such as the US was also tightened because of healthy demand in the US domestic market.
Lacklustre prices for PVC spot material in the Chinese import market also dampened export sentiment on the sellers’ part, who preferred to sell their cargoes to other regions such as the Middle East instead.
Demand in Asia was increasingly weak in the second half of 2013, especially when winter set in and affected construction activities in parts of northeast Asia. As a result, PVC spot prices did not observe significant price increase in tandem with feedstock ethylene, but instead, continued to struggle with upward movement.
PVC prices have been led largely by feedstock ethylene prices throughout 2013, especially when the latter firmed significantly from early August 2013 until December 2013, exerting upward pressure on regional PVC selling ideas as producers faced increasingly squeezed margins.
However, most suppliers and traders struggled with raising PVC spot prices as lacklustre demand, particularly during the winter season when outdoor construction activities were limited, and capped increases.
Although a number of production processes are used to make PVC, depending on the end application, polymerisation is normally done with vinyl chloride monomer (VCM) feedstock in a liquid state.
Suspension polymerisation is the most common PVC process, accounting for approximately 89% of vinyl resin production in North America. There is also emulsion polymerisation and mass polymerisation.
Another process was developed by Belgium-based Solvay called the Vinyloop PVC recycling process, which was used at a 10,000 tonne/year demonstration plant brought on stream at Ferrara, Italy, in early 2002.
Going forward, market participants continued to hold on to mixed opinions for the near-term price outlook. Most producers are insisting on firmer spot prices in order to ensure profit margins amid high upstream ethylene prices, and hiking electricity costs in some parts of northeast Asia as local governments implemented initiatives to curb power usage.
On the other hand, some producers expect it to be increasingly difficult for them to sell PVC spot cargoes as firmer selling ideas were met with growing buyers’ resistance, especially when lacklustre demand from downstream industries continue to cap PVC price increase. The absence of new start-up plans in the Asia Pacific region is expected to result in an unchanged supply situation.
However, most market participants continued to paint gloomy pictures of the near-term demand situation because of various factors such as cold weather, sluggish macroeconomic conditions, Asian currency depreciation against the US dollar and political instability in different parts of Asia.