Global PVC market braces for glut as protectionism rises and demand falters

SINGAPORE (ICIS)–The global polyvinyl chloride (PVC) market is poised for a significant supply surplus, primarily driven by a surge in Chinese exports and an increasingly protectionist international trade environment, an industry analyst said on Thursday.

• Chinese exports, protectionism drive market imbalance
• US PVC exports face mounting headwinds
• Industry needs rationalization of supply

This confluence of factors is depressing prices and pushing profitability to unsustainable lows for many producers, Kelly Coutu, director of PVC at ICIS told delegates at the 28th ICIS & ResourceWise World Chlor-Alkali Conference in Singapore, which runs on 19-20 June.

The critical imbalance between robust supply and weakening global demand, exacerbated by a wave of antidumping duties (ADDs), is “clouding the decision to make some type of correction on the supply side so that economics can actually win”, Coutu said.

US PVC EXPORTS FACE MOUNTING HEADWINDS
The US, traditionally a key PVC exporter, is grappling with a dramatically altered trade landscape, according to Coutu.

For years, particularly after the 2008 housing crisis, US producers leveraged their domestic oversupply to become significant global suppliers.

However, the dynamics have shifted considerably.

During the coronavirus pandemic, unexpected do-it-yourself (DIY) demand temporarily boosted PVC consumption.

But consecutive record-breaking hurricane seasons and a severe winter storm crippled US production, forcing a retreat from export markets.

This void was swiftly filled by China, which, facing its own real estate crisis and declining domestic demand, has aggressively ramped up PVC exports.

“We now have two kind of powerhouses in terms of supply being put into the market, and it can’t be absorbed,” Coutu highlighted.

Data for the first four months of 2025 indicate China is on pace to significantly outpace the US in total PVC exports.

ADDs RESHAPE TRADE FLOWS
A slew of ADDs targeting US PVC clearly indicates a rising inclination to shield domestic companies from international competition.

Several key markets have initiated measures to protect their domestic industries:

• Europe and UK: Traditional European markets are largely closing off to US PVC, with ADDs effectively curtailing imports.
• Brazil: A recent surge in duties from 8.2% to 43.7% makes exporting to Brazil “very challenging” for US producers, Coutu noted. This is particularly troubling as Central Latin America was the second-largest region for US PVC exports.
• India: While facing duties ranging from 15% to 50%, Coutu believes some US producers “will be able to compete better than others” depending on individual cost structures.
• Mexico: The outcome of Mexico’s antidumping investigation is crucial. Coutu suggested that if Mexico is “looking at the data, I would say yes to a finding similar to Colombia’s [no antidumping finding]”. However, a different outcome “could be quite troubling for the US, because Mexico is the second largest country for US exports.”

These duties have already begun to shift trade patterns in 2025, with US exports declining in Europe and Asia, while increasing in Latin America (pre-Brazil duty hikes) and the Middle East and Africa, as producers seek new homes for their product, according to Coutu.

PROFITABILITY UNDER PRESSURE
Integrated producers in the EU and Asia face 20% to 30% higher total costs compared to the US, primarily due to natural gas and electricity prices. However, even with a cost advantage, US producers are struggling.

Coutu emphasized that current global spot prices for PVC (US Gulf, Northwest Europe, and Northeast Asian) are below the cost of production for many.

While co-product credits from caustic soda production offer some relief – with a “40% improvement in caustic soda values” helping the industry – the overall profitability across the chain remains unsustainable.

The only recent “blip” of profitability was a short-lived freight arbitrage opportunity created by Red Sea disruption.

For nearly two years, global PVC prices have been “extremely low”, said Coutu, with no clear signs of improvement.

SUPPLY RATIONALIZATION
The core issue facing the PVC industry is a fundamental imbalance between supply and demand.

“This industry needs rationalization of supply,” Coutu asserted, noting that global PVC supply is simply too great for current demand.

Expansions in China, the Middle East, and India are adding significant capacity, even as global growth projections do not support such increases.

China, now seen as the “global price center”, continues to expand its capacity.

The June 24 deadline for the Bureau of Indian Standards (BIS) certification could further disrupt trade flows, potentially displacing a “large volume of PVC that will need to find a home” if Chinese products are unable to meet the new standards, according to Coutu.

Coutu believes this could create an opportunity for US producers that have completed the necessary paperwork and audits to “take up some of that slack that China may not be able to step into”.

A NEW PARADIGM FOR US PRODUCERS
The US PVC industry, historically an accidental exporter, needs to fundamentally rethink its strategy, Coutu said.

Many producers, lacking dedicated global sales forces, rely heavily on traders for market access – a vulnerability exposed by the rise of ADDs as their dependence on traders limits pricing control and access to the granular market data essential for effectively defending against dumping allegations.

Domestic PVC demand in the US is not poor, with “8% growth in PVC demand in 2024”, Coutu said. However, the domestic market is not large enough to absorb the existing production footprint.

“They have to rethink what they’re doing,” Coutu said.

The current environment is forcing the industry into a “great big game of chicken, and who’s gonna blink first?” Coutu said.

Coutu added the health of the global PVC industry hinges on producers acknowledging that “basic economics of supply and demand do matter, and that’s the fundamental over everything that’s going on in this industry”.

Focus article by Nurluqman Suratman

Thumbnail shows pipe made out of PVC. Image by Shutterstock.