PVC rebounds across China and SEA as upstream rally reshapes market sentiment

China’s and Southeast Asia’s PVC markets staged their first meaningful recovery in nearly four months this week as renewed geopolitical tensions in the Middle East triggered a sharp rally in crude oil and restored cost support across the upstream chain. Brent futures soared more than 11% over the past two settlements, while Asian spot ethylene prices on CFR China and CFR Southeast Asia gained around 7-10% so far this week, according to ChemOrbis Price Wizard.

The rebound interrupted a prolonged downtrend that had pushed prices to multi-month lows—including all-time lows for China’s domestic acetylene-based grade—encouraging suppliers to lift offers amid improving market sentiment.

Despite the firmer tone, the recovery remained largely cost-driven rather than demand-led. Buying activity stayed cautious across both markets amid sluggish downstream consumption and comfortable supply, while attention has increasingly shifted to the major Taiwanese producer’s August price announcement. Most market participants expect the producer to lift benchmark offers following the recent surge in crude oil and feedstock costs, although opinions differ on the magnitude of the increase.

Cost-driven rebound reshapes markets after months of declines

The latest rebound was led by China’s domestic market, where prices registered the most visible gains after three and a half months of persistent declines. Ethylene-based PVC increased by CNY150-300/ton ($22-44/ton) from last week, while acetylene-based material rose by CNY150-250/ton ($22-37/ton). The recovery was driven primarily by the sharp rebound in crude oil, which lifted naphtha and ethylene feedstock costs. In addition, stronger PVC futures further improved suppliers’ pricing confidence.

The improvement in China’s domestic market quickly translated into firmer export pricing. Chinese suppliers increased FOB offers by $10-30/ton for ethylene-based PVC and by $20-30/ton for acetylene-based material, marking the first weekly increase since the second half of March, according to ChemOrbis data. The upward revisions reflected stronger production costs and improved market sentiment, while some exporters also reported a modest pickup in buying inquiries following the latest hikes.

A source from a Chinese producer said, “Local carbide- and ethylene-based PVC prices have climbed this week as crude oil rebounded substantially, lifting feedstock costs across the board. The rallying upstream market has turned sentiment more bullish, prompting us to raise our FOB China offers while monitoring demand for further adjustments.” A trader opined, “Prices have increased because crude oil and futures have strengthened compared with last week. Buying inquiries have somewhat improved, leading to more deals.”

The stronger cost environment also spilled over into Southeast Asia’s import market, where import PVC K67-68 prices rose by $20-40/ton from a week earlier. The sharp rebound in crude oil and feedstock costs prompted suppliers from major exporting countries, including China and South Korea, to lift offers. At the same time, widespread expectations that the major Taiwanese producer would announce higher August prices further strengthened sellers’ confidence, reinforcing the upward adjustment in regional import offers.

Supply-demand fundamentals keep challenging recovery

Although sentiment improved and prices reversed course decisively, market fundamentals remained largely fragile across both markets.

Downstream demand stayed weak, with converters continuing to purchase only for immediate requirements due to little improvement in end-user orders. A Vietnamese source shared, “Currently, we prefer to adopt a wait-and-see stance and only replenish when needed. If prices rise visibly, we will skip new purchases.” Meanwhile, a Thai converter remarked, "We do not plan to replenish because demand for our finished products remains muted," highlighting that the recent shift in prices alone has not been sufficient to encourage inventory building.

China faced similar demand challenges while also contending with persistent oversupply. A Shanghai-based producer’s source noted, “Domestic demand is subdued during the seasonal off-peak period, with downstream operating rates showing little sign of meaningful recovery. The rainy season has also disrupted construction activity, further constraining downstream consumption.”

She added, “Export demand remains stagnant as high temperatures and the monsoon season continue to weigh on buying interest in India, while overseas buyers generally remain cautious and prefer to stay on the sidelines.” Competition in India remained particularly intense, especially amid the impending reinstatement of 7.5% import duty, limiting Chinese sellers’ ability to close deals. A trader commented, "Export demand is still weak. It is difficult to sell to India because competing origins are offering lower prices, buyer inquiries are limited, and concluded deals remain low."

Besides, Chinese market participants continued to report ample availability and elevated inventories, although reduced operating rates and production cuts among loss-making producers helped prevent additional supply pressure. Nonetheless, with run rates expected to rise, the supply pressure may become increasingly intense. “Production rates at several plants are expected to increase, resulting in a further expansion of overall PVC supply,” said the source from the Shanghai-based producer.

August benchmark offers from Taiwanese major in focus

With crude oil and feedstock costs climbing steeply, the market has increasingly turned its attention to the major Taiwanese producer’s August price announcement, which is widely expected to set the tone for regional trading in the coming weeks.

Most players anticipate higher benchmark offers, although expectations vary considerably. Some believe the producer may implement rollovers to modest increases to balance stronger production costs against still-fragile demand, while others foresee much steeper hikes if crude prices remain elevated. A Chinese trader opined, “The major Taiwanese producer may raise August offers by around $40-100/ton as crude oil prices have risen sharply.”

While higher August offers would likely provide additional support to regional pricing, many participants remain cautious about the durability of any further gains. Without a meaningful recovery in downstream demand or a tightening in regional supply, firmer costs and higher benchmark prices may struggle to generate a broader and sustained improvement in trading activity, leaving the market heavily dependent on the movement of crude oil and feedstock costs.