Worldwide Market Analysis of the Vinyls Industry

Chemical Market Associates, Inc. (CMAI) announces the completion of the 2011 World Vinyls Analysis.

The annual global market study covers past developments and future projections for supply, demand, production, capacity, trade, pricing and profitability in the global vinyls industry for the period 2005 to 2015.  Included with each analysis is 12 months access to CMAI's online capacity and supply/demand databases with a mid-term supply/demand update incorporating CMAI's latest market outlook. The analysis is a necessary resource for business managers and planning professionals who need to make strategic business decisions in a rapidly changing global economic and market environment.

Current Situation

The global economic recovery that emerged by mid-2009 has been supporting renewed PVC demand growth. Vinyls markets around the world benefited from massive government stimulus packages and other countercyclical policies that supported infrastructure and other public construction projects. Continuing GDP growth, albeit temporarily slower, in large emerging economies like China and India, also moderated the contractions in the global vinyls market in 2008 and 2009.

The dismal conditions in the U.S. vinyls market are persisting today, as high inventory levels in the construction sector effectively prevent new building starts. Global market conditions also remain rather weak, despite the recent improvement in vinyls demand. Excess vinyls capacity and the resulting low utilization rates continue to exert downward pressure on cash margins. While prices have increased in response to rising energy and raw material costs, regional PVC margins remain close to or even below their respective 2009 levels.

PVC Supply/Demand Outlook

The global oversupply situation is projected to become even more pronounced in the short term as PVC capacity additions will reach their highest level in 2011. Mainly contributing to the current capacity wave are numerous acetylene-based vinyls projects in China. The resulting capacity growth will enable China to become self-sufficient and assume a net export position, once domestic PVC supplies will begin to exceed demand requirements toward the middle of the decade. This will put increasing pressure on smaller, non-integrated producers in other regions, particularly in other Asian countries that had long relied on vinyls exports to China. Capacity additions in other regions will typically consist of large, integrated chlor-alkali/vinyls projects that in some cases also include back-integration into ethylene supplies.

Vinyls demand is closely tied to residential, non-residential and public construction as well as infrastructure projects. Therefore, economic development and the associated rising living standards and industrialization greatly increase vinyls consumption, as illustrated by countries like China, India, Brazil and many other emerging market economies. With still relatively low per capita consumption levels, the potential for future PVC demand growth, particularly in countries like India, remains immense.

Global vinyls trade declined during the 2008/09 recession, when demand fell in almost all geographic regions. Trade volumes in 2010 have been recovering together with demand and will continue to grow over the next several years, supported by a lack of local raw materials in some regions and regional differences in production cost. U.S. producers are benefiting from these developments aided by advantaged feedstock cost.



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