Capacity additions in NE Asia to impact PVC, EDC, VCM prices

09-Nov-06

Continued additions of new capacity in NE Asia will keep international PVC, EDC and VCM prices at low levels over the next few years, according to Chemical Market Associates, Inc. (CMAI)- a market study that provides clients with a historical perspective and an outlook for the global PVC, VCM and EDC markets for the period 2001-2011. CMAI predicts the increase in supply in Asia will be countered by no significant increases in North America and West Europe. The Middle East will not add additional capacity for PVC, but some increase in VCM and EDC is expected. China's campaign to add a significant amount of PVC/VCM capacity continues, therefore, forcing previous major suppliers in Japan, South Korea, Taiwan and Thailand, to seek new markets for these exports. Future demand for vinyls will be fueled by developing countries such as India, Indonesia and China, where infrastructure must be expanded to keep pace with their large and continuously growing populations, creating the need for many vinyl applications. CMAI experts expect the biggest variable for this year's forecast will be how higher energy prices are impacting cash costs throughout the integrated vinyls chain. The changing energy market dynamics have caused regional competitiveness to shift in the vinyls industry, and along with modest growth in the Middle East and increased self-sufficiency in Asia, corresponding changes in the vinyls chain global trade patterns have developed.