China witnesses skyrocketing PVC prices amid restrained power consumption

1. China witnesses skyrocketing PVC prices amid restrictive power consumption Poly Vinyl Chloride prices in China goes alarmingly high due to supply shortages following the government’s directive to curtail power consumption. The higher energy consumption during the first half of 2021 in several Chinese provinces including Ningxia, Xingjiang, and Shaanxi, led to the government’s intervention ordering these provinces to cut down plant operations in later half of 2021. China boasts the highest share in the world’s total PVC production sourced by 25-26 million tons per year of installed capacities in the country. The major share (of around 80%) of the country’s production facilities exploit coal-based carbide as the feedstock while the remaining use ethylene-based feedstock. The carbide-based PVC production plants being predominantly concentrated in these provinces are particularly impacted by the government’s directive that has led to an acute shortage of Poly Vinyl Chloride supplies in the market.

2. The supply crunch has caused a surge in both ethylene-based and carbide-based Poly Vinyl Chloride prices to USD 1625 per ton and USD 1579 per ton after a week-on-week increment of USD 46 per ton and USD 39 per ton, respectively. PVC is a thermoplastic polymer that is widely used in a number of day-to-day applications. The major use of PVC is in the manufacturing of pipes and fittings, bottles, food-covering sheets, cables and non-food packaging. As per ChemAnalyst, China with its large electronics base and increasing construction activities after the revival from the COVID19 period will witness high demand for Poly Vinyl Chloride which in turn is going to further raise the domestic PVC prices. In addition to the domestic prices, the low supplies will also affect the country’s exports which are expected to remain subdued during the remainder of the year.