PVC Market Dynamics Report – Recent Commodity Market Intelligence

I. Price Trends
- Futures Market: On May 27, 2026, the main PVC futures contract closed at RMB 4,914.00 per ton, up by RMB 71.00 (a 1.47% increase) from the previous trading day. The PVC weighted index stood at RMB 4,913 per ton, also exhibiting an upward trend.
- Spot Market: Taking East China SG-5 premium-grade resin as an example, the spot price on May 25, 2026, was RMB 4,720.00 per ton. Overall, spot prices have recently been fluctuating within a narrow range, significantly influenced by volatility in the futures market.

II. Supply and Demand
- Supply Side:
- Domestic PVC capacity remains high, with structural oversupply now entrenched. As of end-March 2026, total national PVC capacity reached 29.115 million tons/year, and industry-wide utilization rate remained stable at approximately 75%.
- In the near term, integrated chlor-alkali enterprises adopt a “compensating chlorine with caustic soda” operational model, rendering PVC supply relatively inflexible. Even when PVC profitability is weak, robust profits from caustic soda production incentivize sustained high operating rates—further intensifying short-term supply slack.
- No new domestic PVC capacity came online in 2026; therefore, current supply pressure stems primarily from persistently high operating rates across existing facilities.
- Demand Side:
- Real estate—the largest downstream application sector for PVC—continues to underperform, weighing heavily on core demand. Year-on-year declines in new residential construction starts have directly suppressed operating rates in downstream segments such as pipes and profiles.
- Post-holiday resumption of operations among downstream users has fallen short of expectations. Recovery in operating rates across subsectors has been uneven, while frequent raw material price fluctuations have dampened procurement enthusiasm among end-users. As a result, demand-driven purchases dominate the market, and large-scale restocking activities have yet to materialize.
- A clear contrast exists between sluggishness in traditional downstream sectors and growth in high-end applications: rising demand in medical devices and food packaging is opening new avenues for industry development.

III. Inventory Status
- Following the Spring Festival holiday, PVC inventories surged to historically elevated levels. As of late April 2026, total domestic commercial PVC inventory remained in the high-range zone.
- De-stocking progress at petrochemical producers and traders has been sluggish, increasing pressure throughout the distribution channel. Deteriorating inventory structure has further exacerbated market concerns. Although the market has entered a de-stocking phase, the pace remains far below expectations; persistently high inventory continues to cap price recovery.

IV. Cost Factors
- Calcium Carbide Process: Domestic calcium carbide-based PVC production costs are highly correlated with coal prices and electricity tariffs—and indirectly linked to crude oil prices. Recently, coal and electricity prices have remained relatively stable, resulting in limited impact on calcium carbide-based PVC costs.
- Ethylene Process: Globally, ethylene-based PVC costs are tightly coupled with crude oil prices. Geopolitical tensions in the Middle East have triggered oil price volatility, significantly affecting ethylene-based PVC costs. Recently, oil prices have retreated, easing cost pressures for ethylene-based PVC.

V. Policy & Geopolitical Factors
- Policy: Government policy plays a pivotal role in shaping the PVC market. In recent years, a series of policies—including environmental regulations and industrial restructuring initiatives—have been introduced to foster healthy, sustainable development of the PVC industry. These measures have effectively improved environmental standards across the sector, but have also prompted many small- and medium-sized enterprises (SMEs) to exit the market due to non-compliance with stricter environmental requirements.
- Geopolitics: Geopolitical tensions in the Middle East exert significant influence on the PVC market. Oil price fluctuations driven by regional conflicts directly affect ethylene-based PVC production costs, thereby reshaping global PVC supply dynamics. Recently, easing tensions in the Middle East and falling oil prices have provided some supportive impetus to the PVC market.

Analysis & Outlook
- Short Term: Market direction hinges on the interplay between policy expectations and fundamental conditions, alongside evolving developments in Middle Eastern geopolitics. The confluence of multiple factors will likely amplify market volatility, leading to a pattern of “range-bound consolidation with alternating gains and losses.” Policy sentiment remains the primary driver of short-term market psychology; however, downside risks stemming from fundamental headwinds must be closely monitored.
- Medium Term: As the market enters the traditional off-season for PVC demand, supply-demand imbalances may intensify further. High inventory levels and weak demand will continue to constrain upside potential for prices, which are expected to consolidate around cost-support levels.
- Long Term: Structural overcapacity is unlikely to be fully resolved in the foreseeable future, and the overall price center of gravity is expected to gradually decline. However, government-driven phasing-out of outdated capacity and accelerated industrial upgrading toward high-value applications represent key strategic directions—potentially generating new growth drivers for the sector.

Forecast
- Prices: In the short term, PVC prices are projected to trade within a RMB 4,800–5,000/ton range, with potentially widening volatility. In the medium term, weakening demand during the seasonal lull and persistent inventory overhang may exert additional downward pressure. Over the long term, gradual price stabilization or modest upward adjustment could occur, contingent upon successful structural reforms and phased withdrawal of obsolete capacity.
- Supply & Demand: Supply will remain elevated due to high operating rates, with minimal new capacity additions. Demand growth in core sectors—especially real estate—will remain subdued. Nevertheless, expanding demand in high-end applications and increased export opportunities may provide fresh momentum.
- Inventory: The pace of inventory drawdown will be decisive for price resilience. Accelerated de-stocking would lend meaningful support to prices; conversely, sluggish progress will sustain bearish pressure.