Global PVC market growth unabated
In recent years, the majority of new PVC production capacity has originated from China, with about 90% of new global capacity coming from there. According to the latest report by the Chemical Market Association of America (CMAI), the global polyvinyl chloride (PVC) market is expected to grow at an average annual rate of 4% over the next five years. This growth is primarily driven by demand in developing countries, where infrastructure and construction sectors are expanding rapidly.
From 2004 to 2007, the world added approximately 5.5 million tons per year of new PVC production capacity, which represented about 14.4% of the current total of 44 million tons annually. A significant portion of this expansion came from China, leading to a shift in trade dynamics. Countries like Japan and South Korea, which had previously relied on China as a major export market for PVC, now face the challenge of seeking alternative markets or reducing their own production levels.
In North America, the demand for PVC remains relatively weak due to a decline in the residential construction sector. This trend is expected to persist into the second half of 2008. Additionally, rising ethylene costs have put pressure on PVC producers’ profit margins. In the U.S., ethylene contract prices have increased for eight consecutive months, climbing by 46%, while PVC price increases have been more modest. As of October, European PVC contract prices stood at 990–1010 euros per ton (FOB Northwest Europe), while Asian vinyl PVC contracts were priced between 910–940 dollars per ton (CFR China).
According to Bank of America analyst Kevin McCarthy, global PVC equipment utilization rose by 20% year-on-year in the third quarter of this year, largely due to strong export demand. However, as export demand slows down, utilization is expected to drop to 80% or below in the fourth quarter. From 2008 to 2009, several new PVC projects will come online globally, further pressuring equipment utilization rates.
CMAI also highlighted that Shintech’s new 300,000-ton-per-year PVC facility in Plaquemine, Louisiana, will start operations in the first quarter of 2008. Georgia Gulf’s 200,000-ton-per-year PVC plant at the same location is set to begin production early in 2008. Meanwhile, Westlake is investing $90 million in a new vinyl production complex in Calvert, Kentucky, which includes an additional 136,000 tons per year of PVC capacity, expected to be operational in the second half of 2009.
As the global PVC market continues to evolve, the balance between supply and demand will play a critical role in shaping future industry trends.
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