China PVC Market Stuck Between Cost Support and Weak Demand

China’s PVC market remained range-bound this week, with prices moving in a narrow band as support from higher production costs and maintenance-related supply reductions offset the impact of weak downstream demand and elevated inventory levels.

The market followed a "downward-then-recovery" pattern during the week. PVC futures initially softened before rebounding modestly, while spot prices mirrored the same trend. Although upstream supply constraints helped limit further declines, sluggish demand conditions prevented any significant upward movement, leaving the market in a state of weak consolidation.

PVC futures on the Dalian Commodity Exchange fluctuated within the RMB 4,800-4,950/ton range throughout the week. East China spot prices for carbide-based SG-5 PVC also recorded a slight increase, ending the week around RMB 4,780-4,830/ton. However, trading activity remained subdued as downstream buyers continued to purchase only according to immediate requirements.

On the supply side, maintenance shutdowns at several production facilities helped reduce market availability. Operating rates across the PVC industry remained relatively low, while many ethylene-based PVC plants entered scheduled maintenance programs. This contributed to easing supply pressure in the domestic market.

At the same time, rising raw material costs provided additional support. Higher coal and semi-coke prices pushed carbide costs upward, increasing production expenses for carbide-based PVC manufacturers. Current production costs are now close to prevailing spot market prices, encouraging producers to maintain firm pricing and reducing the likelihood of major price declines.

Industry-wide energy-saving measures and inspection programs are also expected to support long-term supply discipline by improving capacity management across the sector.

Despite these supportive factors, demand continues to be the market’s biggest challenge. Downstream operating rates remain weak, particularly in the pipe and profile sectors that are closely linked to China's property market. New orders remain limited, prompting many small and medium-sized manufacturers to operate cautiously and purchase only on a need basis.

The real estate sector continues to show a slow recovery, with weak new construction activity and ongoing financial pressures on developers limiting demand growth. Export demand has also softened as rising production costs and weaker overseas orders continue to weigh on market performance.

Inventory levels remain another major concern. Domestic PVC stocks are still high compared to historical levels, while slow demand has delayed the destocking process. The elevated inventory situation continues to cap any strong price recovery.

Looking ahead, the PVC market is expected to remain largely range-bound in the near term, with prices likely to fluctuate between RMB 4,700 and RMB 4,900 per ton. Supply-side support from maintenance shutdowns and higher production costs is expected to provide a floor to the market, while weak demand and high inventories may continue to limit upside potential.

Market participants will closely monitor inventory trends, carbide price movements, and signs of recovery in downstream demand, particularly from the construction and real estate sectors.

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