Under the new circumstances, PVC supply has begun to slow down.

Figure 1: Trend Changes in PVC Capacity/Output from 2016 to 2024

In the long term, from 2016 to 2024, the year-on-year growth rate of PVC's annual capacity and output has shown a downward trend, but the compound annual growth rate remains positively increasing. Looking at the capacity utilization rate, despite the declining trend of capacity growth, the performance of PVC capacity utilization from 2016 to 2024 is clearly in a downward channel, indicating increased market competition among PVC production enterprises.

II. Shifting Supply Structure of PVC

From historical data, the PVC output has maintained a slight increase, with a five-year compound annual growth rate of 3.12%. However, the output of PVC produced by the calcium carbide method has seen almost no increase over the five years, with a calculated five-year compound annual growth rate of only 0.32%. The growth contribution of PVC output mainly comes from the ethylene method, which has a five-year compound annual growth rate of 14.35%. Over the five years, the proportion of ethylene method output in total PVC output has increased from 16.89% to 25.54%.

Figure 2: Changes in PVC Production by Process from 2020 to 2024

In the past five years, the dependency on PVC imports has gradually decreased from 5% to 1%, with processing trade accounting for over 90% of imports, while the proportion of general trade imports is even lower. The import reliance is expected to drop to a historical low of 2024. The substantial growth in domestic capacity/output, coupled with continuous improvements in domestic PVC production processes and the rapid increase in the proportion of ethylene-based processes, is accelerating the substitution of imported materials.

Third, the ethylene process will lead the future PVC supply pattern.

Figure 3: PVC Production Capacity Growth Trend from 2025 to 2029

According to the Longzhong PVC Data Annual Report, from 2025 to 2029, the domestic PVC cumulative new PVC capacity is expected to reach 6.76 million tons/year, with an average compound annual growth rate of around 3%. In addition, from a perspective of equipment technology and enterprise types, the concentration of upstream and downstream resource integration is relatively high in the future, and the competitive advantage of newly added companies is evident. Among the new equipment added from 2025, the ethylene process accounts for 80%, and the proportion of ethylene process in new equipment in the future will be more than 90%.

From the perspective of domestic energy consumption policies, mercury catalyst policies, and policies regarding the new scales of calcium carbide, caustic soda, and others, the calcium carbide process is restricted due to upstream resource shortages, and its overall energy consumption is higher than that of the ethylene process. The ethylene process is mainly located in the eastern region, where the upstream raw material ethylene is sourced widely and conveniently. Additionally, some enterprises are adding new capacity mainly to digest chlorine in the industry or to align with their own industrial layout, allowing for the rapid increase of new PVC facilities using the ethylene process.