Global PVC market growth unabated
In recent years, China has become the dominant force in new PVC production capacity, with approximately 90% of global additions coming from the country. According to the latest report from the Chemical Market Association of America (CMAI), the global polyvinyl chloride (PVC) market is projected to grow at an average annual rate of 4% over the next five years. This growth is largely driven by rising demand in developing nations, where infrastructure and construction sectors are expanding rapidly.
From 2004 to 2007, global new PVC capacity reached 5.5 million tons per year, accounting for about 14.4% of the total 44 million tons currently in operation. Most of this expansion came from China, which has significantly reshaped the global PVC landscape. As a result, traditional PVC exporters like Japan and South Korea have had to seek alternative markets or scale back their operations.
In North America, demand for PVC remains weak due to a slowdown in the residential construction sector, a trend expected to persist through the second half of 2008. Additionally, rising ethylene costs have put pressure on PVC producers' margins. In the U.S., ethylene contract prices have risen for eight consecutive months, increasing 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 was priced between 910–940 dollars per ton (CFR China).
According to Bank of America analyst Kevin McCarthy, global PVC equipment utilization increased by 20% year-over-year in the third quarter of 2008, driven by strong export demand. However, as export demand begins to slow, utilization is expected to drop below 80% in the fourth quarter. With several new PVC projects set to come online between 2008 and 2009, global production capacity will continue to rise, further pressuring equipment utilization rates.
CMAI also highlighted new developments, including Shintech’s 300,000-ton-per-year PVC facility at its Plaquemine plant in Louisiana, which is scheduled to start up in early 2008. Georgia Gulf is also launching a 200,000-ton-per-year PVC line at the same location later that year. Meanwhile, Westlake is investing $90 million in a new vinyl production complex in Calvert, Kentucky, which will add 136,000 tons of PVC capacity and is expected to begin operations in the second half of 2009.
These developments underscore the ongoing shift in global PVC production and the challenges facing traditional producers as China continues to dominate the market.
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