Europe PVC outlook for 2025: Supply imbalance threatens price recovery targets

Leaving behind a difficult year, the European PVC market enters 2025 facing a persistent supply-demand imbalance that continues to hinder any immediate price recovery. Multiple interest rate cuts to curb inflation and the war in Ukraine remained a significant drag on the EU economy, weighing on consumer spending and keeping supplies ample despite supply management efforts. The situation is further complicated by trade barriers, including the impact of antidumping duties, which could shift trade flows and alter market dynamics.

With additional capacity coming online globally and economic uncertainties persisting, the first half of 2025 is expected to remain challenging for PVC producers in Europe, as they face the dual pressure of subdued demand and a global supply glut. As European producers seek to limit imports and maintain profitable exports, their ability to optimize cost structures will be crucial. The impact of trade measures and high production costs could determine whether European suppliers remain competitive or retreat from the market. The way these dynamics play out will shape the future of European PVC production and trade.

2024: PVC struck by anemic demand, struggling to hold above €900s/ton FD

2024 has been marked by tight margins, anemic demand and a supply overhang, despite efforts to manage availability through run rate cuts and address unfair pricing practices in imports. A collapse in demand, driven by ongoing economic challenges, led to a contraction in resin consumption, while stagnation in the finished goods markets sparked a fierce price competition. Indeed, overall demand deviated from seasonal trends and underperformed relative to previous years. This kept spot K67-68 prices below the €900/ton FD NWE level for most of the year.



Despite regional producers’ attempts to recover their profit margins, substantial price improvements remained elusive given poor market fundamentals and attractive imports. The import flow into the region continued uninterrupted through Q1 and Q2, despite logistics problems, surging freight rates and the ongoing investigation into potential dumping on S-PVC imports from Egypt and the US.

Prices fluctuated below €900/ton and failed to stay above that threshold consistently until September. As the above graph shows, however, PVC suppliers managed to push prices higher by late Q3 amid squeezed profit margins. Despite that, the market struggled to rebound significantly from the more than three-year lows observed late last year and into Q1 2024. Producers were unable to secure any meaningful margin expansion, merely managing to pass on costs. Meanwhile, PVC prices in Italy continued to trade at a premium over West European spot levels, due to its smaller market size and higher transportation costs to the south.

Antidumping duties poised to alter trade flows in 2025

By November 2023, the European Commission had launched an antidumping investigation into S-PVC from Egypt and the US, amid concerns that surging volumes in the past years injured the European PVC industry. Still, imported PVC maintained substantial pressure on domestic producers in 2024. Indeed, quarterly data indicated increases in the first two quarters of the year, before Q3 volumes plummeted to their lowest levels in over a decade on a quarterly basis. This dramatic drop can be largely attributed to the introduction of provisional duties taking effect as of July 12, 2024, let alone persistently subdued demand in Europe.

There is little doubt that the definitive, if applied, antidumping duties will upend market dynamics for the entire year of 2025 and possibly beyond. As antidumping duties loom and market pressures persist, importers may also look to adjust their established trade patterns and cost structures to stay competitive in the evolving landscape.

In January-September, the USA (121,000 tons), Mexico (92,000 tons), Norway (37,000 tons), Egypt (32,000 tons) and South Korea (30,000 tons) were the top five PVC suppliers. While the US maintained the lion’s share, its market share fell from 42% to around 35% in the first 9 months of 2024. On the contrary, Mexico raised its share from 20% to 26% on the year. Norway overtook S. Korea’s place after its share reached 10.4% from around 7%. Egypt raised its market share from 7% to 9%, as a side note.

The supplier list may be subject to further changes once the statistics for the final quarter are released, as the impending antidumping duties curb imports from the US and Egypt. For instance, US sellers may direct more volumes to Türkiye, Africa and Latin America given the EU’s awaited antidumping measures and the preliminary antidumping duties announced by India. At this point, logistical operations and freight rates will be important in determining whether more Asian cargoes will make their way to Europe next year.

European PVC exporters face stiff competition from US; this seems here to stay

Europe remained a net exporter, with its exports surpassing its imports by more than twofold in January-September period. Exports from the EU27 were at around 910,000 tons in the first 9 months, indicating an 8% increase from the same period of last year.

Apart from periodically depleting stocks for temporary relief, European producers are largely refraining from exporting due to falling prices and broader global market weakness. They are under significant competitive pressure from US PVC shipments, exacerbated by global trade barriers, which forces them to sell at razor-thin margins. Indeed, US PVC creates intense competition in international outlets, which is negatively affecting European PVC exports and leaving the local market well-supplied.

As anticipated, the nearby Turkish market bore the brunt of the European Union’s antidumping investigation into US PVC shipments. Consequently, European suppliers encountered significant challenges in their key export market. Türkiye remained the largest buyer of the EU PVC with a share of around 30% in January-September. They find netbacks in Türkiye very low, particularly when prices fall to $800/ton CIF, further squeezing their margins.

Another development that has recently come to our attention was the long-awaited announcement of India’s anti-dumping duty on S-PVC imports. India, the world’s largest PVC importer, could serve as an alternative outlet for Europe. However, other factors, such as European suppliers’ margin expansion targets driven by higher conversion costs and freight rates, will be crucial in determining whether arbitrage opportunities can be leveraged effectively. The process for getting BIS certification will be also pivotal as it’s an important step for exporters. Regional sellers may prioritize their local markets if they have no surplus stocks for export, especially given projections that PVC volumes from the US and Egypt will be limited.

2025 contract negotiations underway; approaches differ

As European producers thrive to protect their margins, they are trying to set the starting level higher for 2025 contracts. Yet, there are different approaches among buyers and producers.

Contrary to sellers’ expectations, buyers consider the €1000/ton FD level unreasonably high. Instead, they are pushing for even lower starting prices for next year, citing unpromising demand outlook for at least the first half of 2025. In fact, some producers in West Europe have already conceded to discounts on the starting prices during contract negotiations, with ample supplies reinforcing the fight to capture any limited demand.

Meanwhile, converters heavily reliant on imported resins may opt to commit to longer-term contracts should definitive duties be imposed on specific import origins. It is crucial to note that import origins have lost their competitiveness and came nearly at par with the spot levels recently, even though this has not created a solid increase in offtakes from regional suppliers.

H1 2025: A swings and roundabouts situation lies ahead

The first half of 2025 will have both benefits and drawbacks, with one balancing out the other. The PVC market stands at a crossroads, with regional producers’ margin expansion targets amid higher production costs on one side and poor supply-demand dynamics coupled with external influences like geopolitical and macroeconomic uncertainties on the other side. That is to say, no major price variations are expected to show up in the upcoming period.

A significant disparity remains between global demand for PVC and production capacity. In 2025, an additional S-PVC capacity of 2.9 million tons/year is anticipated, which would add to the global supply glut. In a scenario where demand fails to rebound, regional producers could face further restructuring or reduce production rates in response to the ongoing market conditions, characterized by reduced consumption and higher electricity costs in Europe when compared to other regions. Inovyn had mothballed its two PVC lines at its Newton Aycliffe site, which were not operating at full rates for so long, as a part of its rationalization effort in July this year.

Profitality concerns push producers to hold firm despite ongoing imbalance in supply-demand dynamics. They hope to see better resin demand after definitive duties from early 2025, as well as by around Q2 given seasonal patterns and better weather conditions. This may help sellers to achieve their long-awaited margin expansion targets. How demand evolves will be paramount as demand has been weak enough to offset any supply constraints and has hindered a meaningful price recovery so far. Moreover, the emergence of imported finished goods at competitive prices would destroy already fragile demand.

Growth in the H1 2025 is expected to remain subdued as the ECB is likely to maintain its cautious stance on interest rates until inflation is clearly under control. Manufacturing and energy-intensive industries may continue to face headwinds in the first half of 2025, as energy prices, regulatory challenges, trade uncertainty, and supply chain issues still pose risks. Yet, inflationary pressures will ease somewhat in 2025 due to the decline in energy prices and tighter monetary policy.