Several Factors Negatively Impacting the Pricing of Poly Vinyl Chloride (PVC)
The price of Poly Vinyl Chloride (PVC) on August 15, 2022 was at USD 6,566.00/tonne in India. In the neighbouring country China, the prices were at USD 994.5/tonne on August 15, 2022, compared to USD 1019.1/tonne on August 8, 2022. This clearly shows a downfall of prices through the week.
The worldwide PVC prices reached USD 1,389 per metric ton in May 2022. The prices were estimated at around USD 1,449 per metric tonne in 2021.
The market's growth is being hampered by the fluctuating prices of machinery equipment and raw materials. Furthermore, the concentration of the raw material in one specific location is also hindering the market's development. The easy availability of alternatives at an affordable price can also obstruct the growth rate.
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The government's implementation of strict rules and regulations on several industrial applications will add to the stagnant growth of the market. The absence of change in the demand-supply spectrum and standardization norms due to more substantial restrictions in the Asia-Pacific region will further aggravate the market condition.
During Quarter 2, 2022, Poly Vinyl Chloride rates exhibited a descending slope in China. Between Apri; to June the prices dipped in the country due to the declined requirement in the midst of COVID lockdown restraints. This price of PVC was reached at USD 1238/MT assessing the pipe grade Cost and Freight (CFR) China (Shanghai) in June 2022.
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The PVC suspension grade resin is produced using vinyl chloride monomer and is prominently utilised in construction and building, medical businesses, and automotive industries. Hence, any type of fluctuation in PVC prices in turn impacts the prices of suspension resin.
Between April – June 2022, there was hike in the rates of Poly Vinyl Chloride (PVC) in Europe because of the robust demand from the downstream end-use sectors. There was a surging energy cost and rising raw material prices in the European market due to the continuing war between Russia and Ukraine. Towards the end of June, Poly Vinyl Chloride Suspension calendaring grade K57 FD price was measured at USD 2279/MT at Vreden.
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Furthermore, the United States economy witnessed an increase in the prices of feedstock Chlorine in April 2022 because of the execution of superior strength at a massive manufacturer of Chlor Alkali, Olin, in the United States structure. But the prices ultimately fell in June 2022 with excess disposal of supplies and low demand from downstream construction industry. The PVC suspension grade cost was measured at USD 1784/MT with Free on Board (FOB) based on Louisiana in June 2022.
The surge in cases led to port congestion at various container terminals like Ningbo, resulting in a decline in transit activity. The production rates were slashed due to existing quarantine protocols and lockdowns.
The production of the critical raw material, Calcium Carbide, was shortened due to the rise in the number of covid cases and the execution of Chinese zero covid rule impacting the Price of PVC.
The prices of key raw material Calcium Carbide were slashed in the first few weeks of April, which led to the pile-up of inventories and fulfilment of prevailing requirement in the Chinese local marketplace. As a result of logistical restraints, including the unavailability of trucks and cars, the majority of the distributors had to trade their shares scarce in the national market.
As a result of the quarantine protocols, the shipping expenses and raw material prices were affected from Quarter 1 leading to stifled market growth. Also, the devaluation of the Chinese currency against the US dollar led to price intimidation for the product. The Poly Vinyl Chloride price was around USD 1283/MT for pipe grade CFR China (Shanghai) in June.
According to Procurement Resource, the prices for Poly Vinyl Chloride are affected by the prices of raw materials (Salt and Oil) and the market situations amid global crisis like COVID 19 lockdown. Price fluctuations and unavailability of appropriate resources paired with stringent government policies are all factors that contributed to the market’s stagnant growth. The market is likely to recover as the restrictions are lifted and relaxed.