Due to the weak demand from the global construction industry, after the first quarter of this year, the prices of PVC in Europe, the United States, and Asia have entered a downward path one after another. Up to now, the PVC market in Europe and the United States is still constrained by the weak construction market, and the Asian market is facing great uncertainty. In particular, the Chinese government's regulation of the real estate market has increased the pressure of Asian PVC prices. The global PVC market is in trouble.
European business attitudes are cautious The latest statistics from the European Statistics Office show that current construction income has improved slightly from the beginning of the year. However, the news did not surprise the European PVC industry, they believe that this kind of profit is difficult to sustain. A western-Nordic producer said that although PVC profits have been maintained at around €100/ton since the beginning of the year, raw material costs and operating costs have increased, while sales have fallen sharply, and corporate profitability has remained at the level of last December. In order to obtain a suitable operating profit, prices need to rise by 100-150 euros/ton, but the current market is not as digestible, and this expectation cannot be achieved until the end of the year.
Downstream of the industrial chain also issued the same lament. A large Austrian PVC pipe manufacturer called the market "a battle between vendors and suppliers." He said: "If the price of PVC rises, it will be very difficult for us to pass on the pressure of price increase to downstream users, because there will always be sellers who are trying to get more market share to lower prices."
German specialty PVC producers said that the lowest point of Spanish window and door profile and pipe grade resin consumption fell by 40% from the highest point in 2008, and there has been no sign of improvement so far. Some sellers have no choice but to close the sales point in the area. In addition, market demand and prices in Italy, Ireland, Greece, and Hungary also performed poorly.
Sales in Western and Northern Europe increased by 5% to 6% year-on-year in May this year. Despite this, European PVC producers are still cautious about the future. The more general view is that the improvement in demand is driven by the government's fiscal stimulus plan, but the actual demand has not really improved. A German manufacturer stated that the current positive demand for profiles mainly comes from Russia, because the government will build 700,000 to 750,000 houses within a year and will refurbish the original buildings. There are also a small number of people who are optimistic and believe that the year-on-year increase in sales indicates that the economic recovery is significant and will be further extended to the construction industry.
However, almost everyone is aware that the lower exchange rate of the euro provides favorable support to the market, and European export companies will usher in opportunities.
U.S. demand improvement is limited After a difficult 2009, U.S. large-scale construction demand improved in 2010, and the government also reduced the federal tax of $8,000 for first-time buyers. As the traditional peak season of construction demand, the spring climate is suitable for construction projects, and the old houses also began to be renovated, so PVC demand has improved. The American General Contractors Association AGC report said that 12 U.S. Federal Reserve Districts have provided economic improvement reports, but many regions have used slow, cautious measures to describe the pace of growth. According to AGC, many construction projects are still stagnant and the lack of available credit is the main obstacle. In addition, the US Department of Commerce stated that the one-year US$8,000 federal tax relief plan expired, resulting in a significant drop in the number of newly built homes in the United States in May, a 10% decrease in the number of new homes compared to April, and a construction permit issued in May. The number also fell by nearly 6% from April.
The lack of domestic demand, credit crunch, and fluctuations in raw material costs have contributed to the US buyer's PVC market. It is understood that the price of ethylene, the raw material of PVC in the United States, rose by 12.5 cents/lb in the first quarter of this year.
Asia Faces Uncertainty During the global financial crisis, PVC prices in Asia rose from US$530-580/tonne to US$1,000-1,030/tonne, but prices fell in the first half of this year. On the 2nd of July, the Asian PVC price was 840-860 US dollars / ton, a drop of about 16% from the highest point in March. This is mainly because Asia's largest market - China's PVC imports from January to May this year was only 491,000 tons, down more than 50%.
Some experts believe that this is mainly because the Chinese government began to take measures to regulate the overheated real estate market from the end of 2009. In recent months, regulatory measures have still been introduced frequently, and the suppression of PVC demand cannot be ignored. It is expected that the growth rate of China's GDP this year will be 11%, and housing construction and government investment in public infrastructure are slowing down. Based on the above factors, it is estimated that China's demand for PVC in 2010 will grow at a relatively slow rate, around 5%.
Demand for PVC in Southeast Asia is expected to improve this year. Indonesian market players are optimistic about PVC demand driven by the construction industry. It is expected that with the end of the rainy season, demand for PVC in key construction industries will pick up, and government budget expenditures on key infrastructure and construction sectors will soon be liberalized. Will further expand domestic demand.
European business attitudes are cautious The latest statistics from the European Statistics Office show that current construction income has improved slightly from the beginning of the year. However, the news did not surprise the European PVC industry, they believe that this kind of profit is difficult to sustain. A western-Nordic producer said that although PVC profits have been maintained at around €100/ton since the beginning of the year, raw material costs and operating costs have increased, while sales have fallen sharply, and corporate profitability has remained at the level of last December. In order to obtain a suitable operating profit, prices need to rise by 100-150 euros/ton, but the current market is not as digestible, and this expectation cannot be achieved until the end of the year.
Downstream of the industrial chain also issued the same lament. A large Austrian PVC pipe manufacturer called the market "a battle between vendors and suppliers." He said: "If the price of PVC rises, it will be very difficult for us to pass on the pressure of price increase to downstream users, because there will always be sellers who are trying to get more market share to lower prices."
German specialty PVC producers said that the lowest point of Spanish window and door profile and pipe grade resin consumption fell by 40% from the highest point in 2008, and there has been no sign of improvement so far. Some sellers have no choice but to close the sales point in the area. In addition, market demand and prices in Italy, Ireland, Greece, and Hungary also performed poorly.
Sales in Western and Northern Europe increased by 5% to 6% year-on-year in May this year. Despite this, European PVC producers are still cautious about the future. The more general view is that the improvement in demand is driven by the government's fiscal stimulus plan, but the actual demand has not really improved. A German manufacturer stated that the current positive demand for profiles mainly comes from Russia, because the government will build 700,000 to 750,000 houses within a year and will refurbish the original buildings. There are also a small number of people who are optimistic and believe that the year-on-year increase in sales indicates that the economic recovery is significant and will be further extended to the construction industry.
However, almost everyone is aware that the lower exchange rate of the euro provides favorable support to the market, and European export companies will usher in opportunities.
U.S. demand improvement is limited After a difficult 2009, U.S. large-scale construction demand improved in 2010, and the government also reduced the federal tax of $8,000 for first-time buyers. As the traditional peak season of construction demand, the spring climate is suitable for construction projects, and the old houses also began to be renovated, so PVC demand has improved. The American General Contractors Association AGC report said that 12 U.S. Federal Reserve Districts have provided economic improvement reports, but many regions have used slow, cautious measures to describe the pace of growth. According to AGC, many construction projects are still stagnant and the lack of available credit is the main obstacle. In addition, the US Department of Commerce stated that the one-year US$8,000 federal tax relief plan expired, resulting in a significant drop in the number of newly built homes in the United States in May, a 10% decrease in the number of new homes compared to April, and a construction permit issued in May. The number also fell by nearly 6% from April.
The lack of domestic demand, credit crunch, and fluctuations in raw material costs have contributed to the US buyer's PVC market. It is understood that the price of ethylene, the raw material of PVC in the United States, rose by 12.5 cents/lb in the first quarter of this year.
Asia Faces Uncertainty During the global financial crisis, PVC prices in Asia rose from US$530-580/tonne to US$1,000-1,030/tonne, but prices fell in the first half of this year. On the 2nd of July, the Asian PVC price was 840-860 US dollars / ton, a drop of about 16% from the highest point in March. This is mainly because Asia's largest market - China's PVC imports from January to May this year was only 491,000 tons, down more than 50%.
Some experts believe that this is mainly because the Chinese government began to take measures to regulate the overheated real estate market from the end of 2009. In recent months, regulatory measures have still been introduced frequently, and the suppression of PVC demand cannot be ignored. It is expected that the growth rate of China's GDP this year will be 11%, and housing construction and government investment in public infrastructure are slowing down. Based on the above factors, it is estimated that China's demand for PVC in 2010 will grow at a relatively slow rate, around 5%.
Demand for PVC in Southeast Asia is expected to improve this year. Indonesian market players are optimistic about PVC demand driven by the construction industry. It is expected that with the end of the rainy season, demand for PVC in key construction industries will pick up, and government budget expenditures on key infrastructure and construction sectors will soon be liberalized. Will further expand domestic demand.
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