Weak Upstream Market Drives Down the Polyvinyl Alcohol Prices in Asia
Weak Upstream Market Drives Down the Polyvinyl Alcohol Prices in Asia

Weak Upstream Market Drives Down the Polyvinyl Alcohol Prices in Asia

  • 19-May-2023 2:24 PM
  • Journalist: Gabreilla Figueroa

A significant downturn in the upstream market, i.e., Vinyl Acetate Monomer (VAM), has a ripple effect on the value chain. The weakening of the raw materials Polyvinyl Acetate (PVAc), coupled with an ongoing lackluster downstream industry, has created a domino effect, causing Polyvinyl Alcohol (PVA) prices to decline in the Asian market and worry industry stakeholders.

The upstream VAM market, which supplies raw materials for PVA production, is grappling with a variety of factors contributing to its decline. One key factor is the falling cost of Ethylene and Acetic Acid, and another is the reduction in consumer spending, as overseas buyers, mainly US and Germany, tighten their purse strings amid economic uncertainty. With less demand for end products, Asian manufacturers are scaling back their production, decreasing orders for upstream supplies.

Additionally, reduced manufacturing activities across various downstream sectors have further amplified the slowness in the PVA market. Industries such as paper and packaging are experiencing a slowdown in production due to factors like trade tensions, raw material shortages, total new orders falling, and labor constraints. This drop in manufacturing output directly impacts the demand for PVA, pushing prices downwards.

The downstream lulls, specifically in the construction and textile sectors, have added to the woes of the PVA market. The construction industry, a significant consumer of PVA for applications like cement additives and coatings, has experienced a dip in projects due to tighter lending conditions and a general slowdown in the real estate market. Similarly, the textile sector, which heavily relies on PVA for yarn and fabric production, has faced setbacks due to reduced consumer demand and increased competition from low-cost alternatives.

As a result, PVA prices in the Asian market have remained sluggish in the first two weeks of May 2023, and as of 12th May, PVA prices in China and Japan were assessed at USD 2010/MT and USD 2160/MT on a FOB basis, respectively, creating concerns among industry players.

ChemAnalyst experts predict a prolonged period of stagnation in the PVA market as the upstream sector struggles to regain momentum. The imbalance between supply and demand, driven by weakened upstream markets and downstream lulls, will likely keep prices subdued in the near term.

While the road to recovery may be long and uncertain, the market players remain cautiously optimistic about the future. As economies gather speed and downstream sectors regain their footing, there is hope for a gradual rebound in the PVA market.

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