For the Quarter Ending June 2023
In the second quarter of 2023, the CPVC market in North America faced a bearish trend. Despite some positive signs at the beginning, such as a slight improvement in the US economy and increased purchasing activities from the construction sector, the overall situation was overshadowed by various factors. Notably, the prices of CPVC's upstream PVC depreciated due to multiple reasons in the US market. Firstly, the economic growth was not strong enough, and uncertainties regarding a potential US economic recession persisted. This contributed to keeping the market low during the mid-quarter period impacting the CPVC pricing dynamics in the US market. At the same time, the supply of CPVC remained moderate by the end of the quarter and accelerated by the subsidization of production costs through decreasing raw material and crude oil prices. However, the demand for CPVC was largely slow, primarily because of muted export orders from international markets. This decline in demand was influenced by the Federal Reserve's decision to increase interest rates by approximately 5%, affecting international trade. In conclusion, the bearish market conditions for CPVC in North America during the quarter ending June 2023 were driven by a combination of economic uncertainties, fluctuating raw material prices, and subdued demand from the international as well as the domestic market.
The overall market situation for CPVC showed mixed sentiments during the second quarter of 2023 in APAC, with a rise in May, and then again a plunge in the price trend during June of the product. The increase in the demand from the construction industry during May 2023 was followed by a marginal gain in the market momentum of the housing segment during this quarter. Towards the middle of the second quarter of 2023, imports from the export markets also saw a decline along with the volatility in the prices of crude oil, which further disrupted production. The increment in the prices of the commodity was primarily attributed to the rise in the demand from the downstream industry as purchasing activities of the consumer increased substantially, despite a slow economic recovery of the overall Asian market and expensive supplies from China due to reduced production run rates. At the end of the quarter, the supply remained moderate as manufacturers found themselves with adequate inventories, and production ran smoothly due to a fall in the prices of crude oil. The demand from the construction sector was also stable, supporting the final price trend of CPVC by the end of the second quarter of June 2023.
The costs of CPVC saw a deterioration in the second quarter of 2023 in Europe due to the low market exchanges in the European market because of elevated inventories combined with ease in the upstream PVC costs and low downstream inquiries. The primary factors behind this devaluation were concluded as the high-interest rates prompted housing segment demand and the lowered commodity offers in the construction sector. Moreover, the southward CPVC prices were supported by the traders with excess stocks, which must be radiated at limited costs, accordingly reducing profit margins amidst minimal export demand and a hike in the interest rates, and a surge in the Consumer price index by the European Bank. Additionally, the fear of the European economy entering a recession kept buying sentiments from the downstream construction industry low for the commodity. Supplies were consistent toward the end of the second quarter of 2023 due to the decrease in the offtakes in the domestic as well as in the downstream buying activity in the European market.
For the Quarter Ending March 2023
Due to large stocks and sluggish demand in the downstream construction and other competitive sectors, the price of CPVC in the USA showed a downward trend in the quarter ending March 2023, falling 3.3% quarterly. Additionally, the CPVC offers in the US market were hampered by rising interest rates and pessimistic customer purchasing attitudes. The CPVC businesses also experienced competitive cost pressure in the US domestic market amid falling PVC prices and had an impact on the commodity's final negotiations this quarter. Additionally, the vinyl monomer value chain, including CPVC, saw input cost pressure at the end of the first Quarter of 2023 due to the volatility in upstream crude oil prices.
In Asia, CPVC prices showed An upward trend with a rise in the downstream momentum in the quarter ending March 2023, as limited availability of stocks and competitive offers pressured commodity prices northward. The CPVC inquiries surged in the domestic as well as in the international market, and the enterprises felt input cost pressure amidst volatility in the crude oil prices in the APAC market. However, purchasing sentiments varied at the termination of March 2023 as some market players cited low-cost products from Asia combined with competitive freight rates. The major factors that affected the CPVC discussions this quarter comprised an increase in the demand from the construction sector in the expectations of rising housing segment demand in the Indian market.
The German CPVC market saw a prolonged decline in the quarter ending March 2023, along with a recent drop in the price trend at the end of March 2023. Due to sluggish demand from the construction industry amidst the weakening of the housing market of the region, CPVC prices fell in Germany. Consumers of CPVC experienced financial strain as a result of the rise in interest rates and the cost-of-living problem this quarter, impacting the commodity discussions. With high supplies, slow demand, and declining PVC prices in Asia, the imports from Turkey and other European nations have not improved in the CPVC negotiations for April. European market participants were trading restricted to the fulfillment of necessities due to high inflation and weak economic growth.
The CPVC ( Chlorinated Poly Vinyl Chloride) prices showed a downward trajectory throughout the quarter ending December 2022, owing to the muted downstream demand from the construction sector amid a fall in the US real estate market and a slump in the feedstock PVC Resin prices. High inflation weighed on the buying interest in the domestic market and led to curtained production activities in the region. The low consumer confidence affected the CPVC market substantially in the last quarter of 2022. With ample availability of stocks, Formosa Plastics went for maintenance shutdown in Baton Rouge (USA) in December and November for ten days in this quarter by reducing feedstock PVC capacity.
The CPVC prices were low throughout the last quarter of 2022 in the APAC region. The product price trend was impacted by the weak downstream demand amid rising input cost inflation and subdued customer confidence in the building sector. The freight charges and overall feedstock PVC costs have been affected by the muted market activity as a result of the September Typhoons in various Asian countries coupled with COVID lockdown measures. The need basis buying sentiments and sluggish economic conditions in the global market led the product prices to follow a negative trend. Meanwhile, the CPVC manufacturer DCW Ltd. Announced to increase in the capacity of the commodity in the Indian market by commissioning a new unit in FY24. Therefore, the price of CPVC was assessed at USD 1735/MT Ex-Tuticorin (India) for pipe grade K-67.4 in December 2022.
The CPVC prices witnessed a downward trend in the Q4 of 2022, owing to the adequate availability of stocks and weak downstream construction demand in the region. Meanwhile, volatility in crude oil prices and lower feedstock PVC prices has affected the value chain of CPVC amidst the European energy crisis and downstream market uncertainties in this quarter. In addition, the bearish market sentiments for CPVC in the regional market compelled the market players to limit the profit margins in the region and destock piled-up inventories at lower prices. The ease in the feedstock PVC prices and lower downstream construction sector inquiries in the European market remained the primary factors for the plunging price movement of the commodity.