Cracks emerge in Asia PVC rally as China’s correction reaches SE Asia

PVC markets across China and Southeast Asia are showing early signs of correction, as declines in China’s domestic and export prices begin to emerge after a prolonged uptrend. The weakness is also filtering into Southeast Asia through lower Chinese offers.

Although supply-side constraints and elevated upstream costs continue to provide support, weakening demand and mounting buyer resistance to high prices are exposing cracks in the rally. At the same time, the widening discount of acetylene-based PVC is increasingly undermining the competitiveness of ethylene-based material, slowing momentum for this grade across both China and regional import markets.

China’s local, export offers see first decline in 3.5 months

China’s domestic and export PVC markets have posted their first price declines since mid-December 2025, pulling values slightly back from multi-year highs, according to ChemOrbis Price Index data.

Domestic prices fell by CNY50-200/ton ($7-28/ton) on the week, while export offers dropped by as much as $70/ton. Ethylene-based cargoes recorded sharper decreases, even as upstream costs remained elevated amid the ongoing Middle East conflict.

The corrections have been primarily driven by persistently weak demand. A trader said, “Demand in China remains weak, leading to softer domestic prices and putting downward pressure on export offers despite persistently high monomer costs.” A Ningbo-based trader echoed this view, noting that both domestic and overseas buyers have been reluctant to accept elevated price levels.

Meanwhile, supply conditions remain relatively comfortable. Production cuts for ethylene-based PVC have fallen short of expectations, while output from coal-based producers has continued to increase, keeping overall availability ample.

In addition, the sharp drop in futures has added further pressure. May PVC futures fell by a cumulative CNY380/ton ($55/ton) over two consecutive sessions, weighing on spot sentiment and accelerating downward revisions in both domestic and export offers.

Huge C2-acetylene spread dents ethylene-based competitiveness

A key factor behind the market’s recent shift is the widening premium between ethylene-based and acetylene-based PVC. The ongoing Middle East conflict has driven upstream costs sharply higher, with naphtha hitting record highs and ethylene prices on a CFR China basis reaching their highest level since October 2014, ChemOrbis Price Wizard shows. This significantly inflates production costs for ethylene-based PVC, resulting in more aggressive price increases for this segment compared to acetylene-based material.

As a result, the spread between the two grades has widened to $100-150/ton since mid-March, matching the exceptional levels last seen in November 2021. The wider gap has eroded the competitiveness of ethylene-based PVC and weakened buying interest for this segment. A Changzhou-based converter noted, “More buyers have shifted toward acetylene-based material due to its price advantage, while resistance to high-priced ethylene-based cargoes intensifies.”

The shift in preference is also becoming more visible in export markets. In India, China’s largest PVC outlet, small and mid-sized converters have increasingly accepted acetylene-based PVC despite longstanding technical and quality preferences for ethylene-based resin, highlighting the extent to which pricing has overtaken formulation concerns.

Domino effect felt in SEA’s import market

The softer tone in China has quickly translated into Southeast Asia, where Chinese sellers have lowered their offers, dragging down the lower end of the regional import range by $70/ton this week.

Acetylene-based cargoes, in particular, continue to exert strong competitive pressure. Their widening discount to ethylene-based material has forced sellers to recalibrate pricing strategies and limited the room for further hikes in the region.

Buyers across Southeast Asia have largely maintained a cautious stance, restricting purchases to immediate needs. The availability of lower-priced acetylene-based alternatives has further reduced urgency to commit to costly ethylene-based cargoes, reinforcing the slowdown in upward momentum.

April tax change may curb China’s pricing flexibility

Despite the recent corrections, China’s export market may not be headed for a prolonged downturn. Bullish upstream costs continue to provide a firm floor, while the removal of the 13% export tax rebate effective April 1 is expected to significantly alter pricing dynamics.

The rebate removal effectively raises exporters’ cost base, as sellers will no longer benefit from tax refunds on overseas sales. This is likely to reduce pricing flexibility and discourage aggressive discounting, even amid weak demand conditions.

Market participants have adopted a wait-and-see approach. The Changzhou-based converter remarked, “Players are closely monitoring how the new tax policy will impact costs and trade flows, as it introduces additional uncertainty and risk into the market.”