PVC Market Lacks Resilience with Unchanged Prices in Mid-November 2023
- 21-Nov-2023 6:01 PM
- Journalist: Gabreilla Figueroa
Polyvinyl Chloride (PVC) prices exhibited global stability in the third week of November 2023 as the downstream market situation remained uncertain, and the oversupplied market situation has restricted PVC price momentum since October 2023. According to recent insight, the inflation crisis, specifically its effect on residential mortgage borrowing costs, has posed hurdles for the construction industry - a significant market for PVC. This has curbed the price trajectory of the commodity in the initial half of November 2023. The global dynamics of the PVC market emphasize that excess capacities exceed demand, particularly with China exporting large quantities. Despite this, optimism is anticipated by some traders that PVC overcapacities and low prices may be showing signs of recovery globally.
In the second week of November 2023, the domestic spot price of PVC in China fell first and then rose. Overall, the price stabilized this week in the regional market as the downstream market atmosphere was relatively active, with more inquiries and tentative increases from the regional PVC manufacturers. From the upstream perspective, the closing price for the primary US WTI crude oil futures contract dropped by 4.9% per barrel. Similarly, the settlement price for the main Brent crude oil futures contract was USD 77.42 per barrel, reflecting a 4.6% decrease, causing a further decline in the PVC price trajectory.
In the European market, the high input cost situation and low operation rates this week resulted in the stagnancy in PVC prices amidst inadequate demand fundamentals. Meanwhile, some of the European PVC-producing players have reduced production rates, and certain plants will be under discussion for closure as per the latest analysis. The persistently high inflation and interest rates dragged the downstream demand down for PVC throughout the year. Compounding this, the earlier upturn in oil prices led to adverse production costs for chemical producers along the ethylene supply chain, prompting some to halt production or examine rationalization measures for the time being.
As per ChemAnalyst, PVC prices will gain momentum in the upcoming months in the global economy amidst uncertainty in the downstream market situation and less procured inventories. As per the insights, the stock volumes were already low as the market participants will be conventionally cautious, and the first quarter of 2024 is not likely to see a recovery for the PVC downstream business. Moreover, the upstream Ethylene prices are expected to increase in the coming weeks along with volatility in crude oil futures prices.