Boosted by three factors! PVC prices soar

HZ info:In 2025, the polyvinyl chloride (PVC) market struggled under the dual pressures of low prices and oversupply. According to data monitored by the Buying Chemical Plastics Research Institute, by the end of 2025, the price of Type 5 material in East China was around 4,500 yuan/ton, down 10% from the price of 5,000 yuan/ton at the beginning of the year.

However, entering 2026, driven by factors such as production cut expectations, policy adjustments, and regional market differentiation, PVC market prices have rebounded significantly. On January 6th, the main PVC futures contract opened higher and continued to rise, with an increase of over 3%, and spot prices rose by about 120 yuan/ton. In the capital market, stocks related to the PVC industry chain also showed linkage. Among them, Zhongtai Chemical and Chlor-Alkali Chemical rose quickly to the daily limit after opening, Xinjiang Tianye and Junzheng Group opened higher and fluctuated to the daily limit, Erdos rose by over 8%, Wanhua Chemical rose by nearly 8%, Beiyuan Group rose by 5%, etc. However, at present, various factors are still in a state of competition, and the trend of PVC prices remains uncertain. This article will analyze the development trajectory and future trends of the industry from four dimensions: supply and demand pattern, cost drive, policy influence, and regional market characteristics.

Supply and demand pattern: Excess pressure remains unabated, with expectations of production cuts heating up.

In 2025, although global PVC trade volume approached an export record, prices fell to a 20-year low, with most producers suffering losses. The core contradiction of oversupply has not been fundamentally alleviated. Entering 2026, it is still difficult to see a turning point on the demand side. Nearly 80% of downstream PVC demand is concentrated in real estate-related fields, and the slow recovery of the real estate sector has led to sustained weak demand. Although the overall operating rate of the downstream industry is higher than the historical average, purchasing willingness remains lukewarm, making it difficult to form effective support.

On the supply side, the persistent calls for production cuts have become a core focus in the market.In December 2025, Westlake Chemical in the United States shut down a PVC factory, firing the first shot in global production cuts and sending a clear signal that the cost and profit structure was unsustainable. Due to the intensifying pressure of oversupply in the Asian market, some marginal factories have fallen into losses, making production cuts in the region more likely. Although no producer in the US market has publicly adjusted its operating rate, the price stabilization effect brought about by previous plant maintenance has given traders hope for the continuation of tightening supply. If the PVC operating rate in the United States remains at around 80%, the Latin American region may achieve a tight balance; if the operating rate rebounds, its products will directly compete with Asian PVC in the African, Middle Eastern, and Indian markets.

At the inventory level, the current in-house and social inventories of PVC plants are at a neutral position. However, with an expected increase in inventory on a month-on-month basis by the end of 2025, coupled with a planned capacity expansion of approximately 300,000 tons in 2026, it is highly likely that output will remain high even if the growth rate of production capacity declines significantly. The pressure of supply-demand imbalance will continue to persist.

Cost Drivers: Dominated by Calcium Carbide Prices, Electricity Price Adjustments Become a Potential Variable 

In PVC production costs, calcium carbide expenses account for 65%-70% of the total cost of calcium carbide production, making it the core factor determining costs. The electricity consumption per ton of calcium carbide production is as high as 3000-3400 kWh. Its price fluctuations are directly transmitted to PVC through the cost side. The chlor-alkali co-production process characteristics of PVC and caustic soda make PVC output somewhat passive, and the transmission of profit deterioration to output is relatively lagging. In 2025, the gross profit margin of PVC calcium carbide production has fallen to -500 yuan/ton, and the industry is facing a severe loss situation.

The advancement of differentiated electricity pricing policies has become a key potential factor affecting costs. Currently, some regions have introduced preliminary policies that impose a surcharge of 0.1 yuan per kilowatt-hour on restricted high-energy consumption production capacities. If this policy is implemented nationwide, the production cost of PVC will further increase. Based on the calculation that electricity prices rise by 10 cents, the cost per ton of PVC will increase by 512 yuan, which will exacerbate industry losses and potentially trigger a chain reaction of "losses - liquid chlorine price reduction - profit decline of chlor-alkali co-production plants - output contraction", providing temporary support at the bottom of prices. In addition, the rebound in crude oil prices has also created a short-term bullish sentiment in the PVC market, but its substantial impact on fundamentals is limited.

Policy Disturbance: Trade barriers and industrial regulation exert dual influences 

On the international trade policy level, posing multiple tariff obstacles for US PVC exports. Since January 2026, the European Union has imposed definitive anti-dumping duties ranging from 58% to 77% on US PVC, directly undermining its product competitiveness. Mexico has initiated an anti-dumping investigation into US suspension PVC, increasing uncertainty in trade flows. Although global PVC trade volume is expected to remain high in 2026, tariff barriers will reshape the regional trade landscape. For instance, Brazil has shifted its procurement focus to tariff-exempt countries such as Colombia, Argentina, and Egypt due to increased tariffs on US and Asian PVC.

In terms of domestic industrial policies, the deepening and promotion of differentiated electricity pricing policies have become an important path for supply-side reforms. This policy guides resource allocation through refined price signals, forcing high-energy-consuming enterprises to undergo energy-saving renovations or exit the market, which will promote the optimization and upgrading of industrial structure in the long run. However, in the short term, policy implementation faces multiple challenges such as local tax revenue and employment pressure, and existing policies have issues such as overlapping tools and lagging pricing standards. Their actual impact on PVC supply still needs to be observed.

In addition, policy changes in the Indian market have attracted attention. The withdrawal of new quality control regulations and the expiration of the anti-dumping investigation without extension have led to the Indian PVC price decline ranking among the top globally, and also brought uncertainties to the adjustment of global trade flows.

Regional Markets: Increasing Differentiation, Core Variables Emerge Prominently 

The global PVC regional markets exhibit distinct characteristics of differentiation. In the European market, progress in the Russia-Ukraine peace negotiations and post-war reconstruction needs are expected to drive PVC consumption, with market sentiment cautiously optimistic. The Indian market has become a core variable influencing price trends in 2026, despite the increased likelihood of the US PVC gaining more market share after the removal of control measures.

On the one hand, the US market is facing pressure from export tariffs, while on the other hand, expectations of production cuts are supporting market confidence. If the tight balance between supply and demand can be maintained, it will provide some support to prices.

In 2026, the PVC market will be caught in a complex web of supply-demand dynamics, cost pressures, and policy disruptions. In the short term, expectations of production cuts and cost support may drive a phased rebound in prices, but weak demand and inventory pressures will limit the upside potential. In the long term, the pace of implementation of differentiated electricity pricing policies, the recovery process of the real estate industry, and changes in the international trade landscape will become core variables determining market trends. For market participants, it is necessary to closely monitor the implementation of production cuts, the strength of policy enforcement, and changes in regional demand, and cautiously seize phased opportunities.