China’s PVC exports hit records in 2021; challenge global suppliers

China’s PVC exports almost tripled to hit above 1.6 million tons in January-November 2021 and hit an all-time high. Having beefed up its sales notably in almost all export destinations despite overrated freight rates, China also outperformed the prevailing PVC supplying countries including the US, Taiwan, Germany, France and Japan.

China fills in US absence across PVC markets

The US is the world’s largest supplier of PVC, with its capacity to export nearly 3 million tons per year. Nevertheless, this major petchem hub with a PVC production capacity of around 21 million tons was widely buffeted by hurricanes and polar storms during 2021, causing exports to slump almost by half. At this point, China came into play to make up for the loss of US PVC in global PVC markets.

China is indeed a net exporter of PVC, as well, thanks to its installed capacities of 25 million tons, %80 of which is for coal-based acetylene production. Nevertheless, China had been running PVC plants at reduced rates of around 70% and standing in the 7th or 8th place in the ‘top PVC exporters’ list before they ramped up their run rates in 2021 and moved up to the first place in the list.

The world’s largest PVC buyer was surely the first target

Unsurprisingly, India was the top destination for Chinese PVC with a 20% share in overall exports. There was a yearly increase of more than 500% in China PVC exports to India in 2021, which helped China to move to the league of major Northeast Asian suppliers including Japan, Taiwan and South Korea.

Regardless of the considerable jump in China’s exports to India, India’s top PVC supplier remained Japan in 2021 - albeit with a 25% decrease on year. This decrease was a result of the turnaround season in Japan, according to traders. Taiwan maintained its place as the second largest PVC supplier of India with a small yearly increase, while China outpaced South Korea with only a small difference to be the third largest supplier.

Apart from challenging the major Northeast Asian suppliers in the world’s largest PVC buyer country, China appears to have stolen the market share of relatively far suppliers from the US, West Europe, Mexico and Russia.

The most precipitous climb was in exports to Egypt

China’s second top destination for PVC exports was Vietnam. As a nearby route, Vietnam formed 12% of the overall exports with a yearly increase of 274% in 2021.

As mentioned above, China raised its exports to almost all destinations. However, the most hefty increase was to Egypt due to a low base effect as exports to this country increased more than 17 times. Now that US PVC will have a new antidumping duty applied in Egypt, Chinese PVC is set to be more dominant in 2022.

China ramped up exports to a record despite all-time high freight rates

China has managed to raise its share across PVC markets, defying all the lingering logistic hurdles and overrated freight rates. Although freight rates from China to the US, Europe and the Mediterranean have come off their peaks as high as $18,000 per 40ft container in October, they are still quite elevated at around $13,000-14,000.

PVC prices across the board also rose tremendously in 2021 on the back of never-ending supply issues. These inflated levels in PVC prices appear to have helped Chinese PVC exporters to eliminate the impact of the sky-high freight rates and shipping snarls.

What will 2022 unfold across PVC markets when the US is back in the game?

The US is expected to step up efforts to gain its market share back in 2022 in sync with recovering production rates and a recent capacity expansion. Nevertheless, domestic sales have been robust inside lately. Plus, the Q1 maintenance season may offset the impact of increased capacity. Full rates in production are expected by April, according to RTI.

Thus, US PVC may not exert an immediate pressure on markets, helping Chinese sellers continue to boost exports in Q1. Whenever supply snarls are fully resolved and US PVC exporters return to markets with aggressive prices to clear stocks, China may lose its competitive edge as it still has quite high freight rates.