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Chinese PVC Industry faces domestic overcapacity and rise in imports

December 08/2009
December 08 ( -- Chinese PVC productivity rose from 5.23 mln tons in 2003 to 15.81 mln tons in 2008. Chinese PVC apparent consumption reached 9.27 mln tons with the productivity surplus of 6.54 mln tons in 2008. As per, Chinese PVC productivity expansion is closely related to the improvement in demand expectation. Local governments have transfer lands to maintain local economic growth, leading to majority of the PVC expansion in Chinas western regions with abundant coal and electricity such as Inner Mongolia, Xinjiang and Ningxia.

Globally, the PVC production mainly adopts the ethylene process. However, most Chinese PVC enterprises have adopted the calcium carbide process as China is rich in coal while short of petroleum. Over 70% of Chinese PVC productivity is produced by the calcium carbide process. Chinese PVC production capacity increased in 2009. Infact, the country faces overcapacity with depressed exports and excessive imports. From January to September 2009, Chinese PVC import volume and value amounted to 1.4765 mln tons and RMB 1.0812 bln, rising by 131.1% YOY and 54.9% YOY respectively. From January to September 2009, Chinese PVC export volume and value came up to 166,900 tons and US$143.38 mln, falling by 69.4% YOY and 75.7% YOY separately. From January to September of 2009, China imported majority of its PVC from Japan with the import volume and value reaching 319,800 tons and US$242.456 mln.

Generally, when the international macro economy develops rapidly and the petroleum price stays high, the calcium carbide process has obvious cost advantage as the ethylene process cost is comparatively high; in the opposite, when the international economy goes into recession and the petroleum price is reduced, the calcium carbide process loses the cost advantage as it requires high energy consumption but downstream raw material prices such as coal, electricity and petroleum have supports. Chinese PVC industry has entered the high-cost supporting period at present. Its price tendency is determined by the upstream production costs. Chinese PVC production by the calcium carbide process cannot acquire the cost advantage unless the ethylene PVC production cost is raised by the increase of international crude petroleum and petrochemical product prices.
Chinese Ministry of Commerce declared on September 28th, 2009 that it will continue the anti-dumping measures against PVC made in US, South Korea, Japan, Russia and Taiwan since September 29th, 2009 with the validity of five years.


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