In Q3, 2024, PVC powder prices initially fell and then rose, significantly below the levels seen in 2023. By September, prices hit a yearly low. As of September 26, the average price for PVC powder in Q3 was RMB 5,534/mt, down RMB 273/mt or 4.7% from Q2 (RMB 5,807/mt) and RMB 584/mt or 9.54% compared to the same period in 2023 (RMB 6,118/mt).

Key factors influencing the Q3 market trends include:

1. China’s domestic and foreign macroeconomic data underperformed. China’s domestic real estate data continued to weaken, and the PMI remained below 50. At the same time, global market sentiment was affected by expectations of economic recession and rate cuts, influencing participant outlook.

2. China’s PVC powder fundamentals remained weak. While downstream orders were maintained in July, August saw a slowdown, partly due to the hot weather, and September saw no significant recovery in domestic demand.

3. Export drive remained weak. From 2021 to early 2024, PVC exports played a crucial role in supporting the market, especially when domestic demand was lacking. However, with India’s BIS certification and anti-dumping measures in play, the export momentum weakened. Despite a brief uptick in exports in mid-August and early September, it wasn’t enough to halt the overall price decline.

4. Integrated profit saw improvements in Q2. Even though PVC prices continued to decline, calcium carbide also saw concurrent drops. Coupled with strong caustic soda profits, integrated profit margins for PVC plants increased. As of September 26, integrated profit margins for chlor-alkali producers in Shandong were RMB 443/mt, up RMB 10/mt from Q2. Consequently, there were few production cuts or plant shutdowns, and the PVC industrial operating rates remained high. By September 26, the PVC powder industrial operating rate in Q3 stood at 75.94%, up 2.37 percentage points QoQ and 2.65 percentage points YoY.

Q4 will possibly first see a slight demand recovery in October and then enter the slack season.

The PVC powder supply may increase in Q4 while demand remains a concern.

The weak reality of September has led to widespread worries about October’s demand. Export orders for soft products like film and flooring may improve due to the holiday season in Europe and the U.S., but this demand segment remains small. The slowdown in global economic growth is expected to impact the export volume. Additionally, with cold weather setting in by November in northern regions, construction activity will slow, further weakening demand. India’s BIS certification on December 24 may also affect exports. On the supply side, only a few companies plan maintenance shutdowns in October, affecting the capacity of 2,150kt/a (excluding long-term shutdown enterprises). No major maintenance plans are currently scheduled for November or December, meaning operating rates are expected to remain high.

While policies are expected to be further strengthened, it remains uncertain whether they will be able to restore market confidence.

The U.S. Federal Reserve has already started gradually cutting interest rates, and there is increasing alignment between domestic and international monetary policies. However, the effectiveness of China’s growth stabilization efforts depends on the extent to which policy measures can unlock growth potential, the degree of industrial price recovery on a month-over-month basis, and the restoration of domestic market confidence.

In conclusion, the PVC market in Q4 is likely to see prices rise first and then fall. Although policy measures may boost sentiment temporarily, the oversupply situation in the PVC industry will likely cap any potential gains, leading the market to revert to weak fundamentals even after a brief rebound.