More Plant Shutdowns Likely in Europe: Will the PVC Market Improve?

In the second half of 2025, the global polyvinyl chloride (PVC) market will continue to face challenges as demand growth lags behind capacity expansion, with Asia being particularly affected. The impact of U.S. tariffs on the re-export trade of PVC finished products has further exacerbated the weakness in the PVC market fundamentals. Currently, the global PVC market is focused on India: on one hand, the Bureau of Indian Standards (BIS) has postponed the implementation of PVC import certification requirements to December; on the other hand, the highly anticipated anti-dumping investigation is approaching its final conclusion. These changes may reshape regional trade flows. Additionally, signals of further consolidation have emerged in the European market, while competition between U.S. PVC products and those from Asia is intensifying.

In the context of sluggish demand, PVC production capacity in Asia continues to increase, and producers expect to address the oversupply issue by reducing operating rates. Meanwhile, fluctuating freight costs further exacerbate the export situation.

From the demand side, with the BIS certification requirement postponed to be implemented on December 24, PVC demand in India is expected to recover. However, opinions among Indian market participants regarding the impact after the BIS certification takes effect vary: they anticipate that more companies will obtain BIS certification through audits, but the trade flow adjustments made to meet certification requirements may lead to a significant increase in India's landed prices, thereby suppressing demand. In addition, infrastructure construction after the monsoon season and the peak season for festival stocking may boost India's PVC demand in September, but it is still too early to determine whether demand will rebound by the end of the third quarter.

India's economic growth is expected to provide demand support for the PVC market. However, the general market consensus is that, before the results of the anti-dumping investigation are clarified, PVC prices may remain at low levels due to the competitive pricing of East Asian supplies.

In Qatar, the new 350,000 tons/year PVC plant of Qatar Vinyl Company located in Mesaieed is scheduled to start production in September. Sources expect that Europe might become the core export market for this plant, as Qatar's domestic capacity has surpassed its internal demand. Although some cargoes will be shipped to India, it is not the main market. Sources indicate that profit margins in the European and African markets are higher. Most market participants in India also believe that in the short term, the impact of this plant on Indian PVC prices will be negligible.

In the second half of 2025, more plant shutdowns may occur in the European market. With persistently weak demand, competitively priced imported goods, and production costs higher than in other regions, multiple factors are converging to make small-scale and less-integrated PVC plants in Europe most vulnerable to closure, as producers seek to improve profit margins. A European PVC producer stated: “The core strategy at present is to improve the cost structure through resource integration.”

Although demand is expected to remain flat or weaken, Germany may show positive signs as the new government has pledged to invest 500 billion euros in infrastructure development and climate transition. In addition, if a peace agreement is reached between Russia and Ukraine, reconstruction needs may boost interest in PVC procurement.

Given the presence of arbitrage opportunities, traders will continue to sell Asian goods to Europe, with Italy and Spain expected to remain the main markets for Asian supplies.

Affected by stronger price competitiveness of Asian PVC, import tariffs in Brazil, and a weak domestic housing market, the outlook for the US PVC market is mixed, with an overall pessimistic tone.

PVC export prices in Asia and the United States are similar, leading to direct competition between the two regions in the global import market. Platts data shows that on July 24, the FOB price of PVC in Houston, USA was assessed at $630/ton, down 22% year-on-year and the lowest in five years; on the same day, the East Asia FOB price was assessed at $625/ton.

Previously, Brazilian importers benefited from export competition, but the increase in import tariffs changed this situation. At the end of May, Brazil raised the U.S. PVC anti-dumping duty from 8.2% to 43%, and subsequently increased import taxes on Asian PVC, leading to a decrease in exports from both sides to Brazil.