Tight regulations to hinder China's PVC production causing a surge in prices

The PVC production regulations imposed in China with a view to control pollution levels and reduce electricity and coal consumption are set to continue even after the closure of the Beijing Olympics on August 24, which will hamper production, thereby causing a surge in PVC prices. As per China Chlor-Alkali Industry Association, about 30 producers in China shut plants while the Olympics are on as well as on stricter environmental controls and higher feedstock costs. More plants are expected to close to meet stringent pollution regulations. Amongst the plants that will need to close, majority will be coal based PVC producers. In 2007, China's production amounted to 9.4 mln tons of PVC, 25% of world's total PVC production. With more than 65% producers of PVC in China been coal-based the production may drastically fall, pushing the prices to record highs. This scenario may be a blessing for Tokyo-based Shin-Etsu Chemical Co. and Taiwan's Formosa Plastics Corp., the world's biggest PVC makers.
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