Global PVC Overcapacity May Take Several Years To Digest

According to Anxunsi, a global energy and chemical industry market information service provider, Alexander Castro, Director of PVC Business at Unipar in Brazil, stated at the 43rd Latin American Petrochemical Association Annual Meeting held from November 11th to 14th that global PVC demand is starting to improve, but excess capacity may take several years to digest.

Unipar mainly produces chlorine, caustic soda, and derivatives of chlorine, such as PVC, vinyl chloride monomer (VCM), dichloroethane (EDC), and hydrochloric acid (HCl). Architecture and water sanitation are the two main end markets of the company. Unipar has two production factories in Brazil and one in Argentina. It is currently building a third production factory in the state of Bahia, Brazil.

PVC is a key plastic used in the construction industry, and its current production capacity exceeds demand. Castro said that inflation has pushed up borrowing costs and hit the housing mortgage market. In addition, China's surplus PVC is being exported in large quantities, which is also putting pressure on market prices.

But Castro said that overcapacity and low prices may start to revive PVC demand globally, which is a relief for companies such as Unipar that have to compete at higher costs globally. Castro said, "In the coming years, we won't see many new PVC production capacity put into operation, and it is expected that the demand and supply curves will return to normal. Our task is to seek better profit margins in the coming years."