Asian vinyl chloride monomer (VCM) prices decreased in July 2025 as slack downstream demand and oversupply countered the positive tone felt early in July.
The PVC spot market, heavily correlated with VCM trends, also presented evidence of mild recovery in the initial half of the month. VCM-inclined prices rallied together with PVC as futures gained, and crude oil prices appreciated amid macroeconomic stimulus policies. Balanced supply and demand favoured a temporary reduction in VCM inventories, supported by more market transactions as downstream procurers pushed up forward procurement.
But momentum turned in the second half of July. While PVC futures remained firm, spot VCM prices started to lose steam. In the last week, the VCM market was back to serene times, with supply-demand balance restored and prices relaxing from previous highs.
VCM market action was firm for much of July on the strength of downstream restocking. Nevertheless, social inventories for VCM remained high because producers retained high operating levels. This continued high production kept the Asian VCM market in good supply, pushing August prices under pressure despite short-term inventory correction.
Calcium carbide, an important feedstock for downstream PVC in China, also weighed on sentiment. Calcium carbide prices declined month-on-month, undercutting cost support for VCM producers. Operating rates in the downstream remained low, typically below 50%, due to inventory overhangs and a sluggish pickup in hard plastics production.
Exports brought relief to the VCM market due to firm overseas demand, but competition along the overall VCM supply chain remains tight. Chinese manufacturers are quickly increasing ethylene-based PVC capacity, which is highly correlated with VCM production. New Jiangsu, Fujian, Tianjin, and Qingdao plants should contribute 1.7 million metric tons of production by year-end. This growth increases fears of oversupply in VCM for Asia, driving later-year production reductions.
India's Bureau of Indian Standards (BIS) delay in imposing new PVC import restrictions until December 2025 has held VCM-related Indian converter demand in check. While post-monsoon construction activity and festival-season restocking are expected to stimulate Q3 demand, the VCM market outlook remains covered by the spectre of high inventories and persistent anti-dumping probes.
As per ChemAnalyst, Asian VCM market participants anticipate little fundamental adjustments in August. Supply and demand are both expected to post marginal increases, but high runs are expected to keep VCM stocks in check, preventing price relief. Downstream VCM purchases are likely to continue targeting minimum needs, with exports retaining a steady though competitive presence.
Overall, July Asian VCM prices captured the pressures from high supply availability, hesitant purchasing behaviour, and growing regional capacities. Unless growth in VCM demand ramps up considerably, the market is expected to be weak for the rest of Q3 2025.
