By mid-week, the premium of FOB China ethylene-based PVC K67 over carbide-based material climbed to $75/ton, marking the widest spread since mid-2022. Under normal conditions, ethylene-based PVC typically carries a premium of around $20/ton over the coal-based acetylene grade.
Feedstock disruptions hit ethylene-based PVC harder
The widening gap is largely driven by disruptions to energy and feedstock flows from the Middle East, which have disproportionately impacted ethylene-based production. The closure of the Strait of Hormuz has restricted the movement of naphtha and LNG, tightening ethylene supply chains across Asia.
Producers relying on externally sourced vinyl chloride monomer (VCM) have been particularly affected, facing both rising costs and feedstock shortages. As a result, ethylene-based PVC prices have surged more sharply than carbide-based material.
Compared to pre-conflict levels, FOB China ethylene-based PVC K67 prices have risen by around 38%, while acetylene-based PVC has increased by approximately 30% over the same period.
Several Chinese producers have already declared force majeure or reduced operating rates due to feedstock constraints. One major producer reported difficulty securing ethylene and naphtha supplies and is planning to cut operating rates, while another has informed customers of its inability to meet some contractual obligations.
Operating rates highlight the divergence, with carbide-based PVC plants running at around 85%, compared to roughly 60% for ethylene-based units.
Market divided on carbide-based PVC rally
Market participants remain divided on the sustainability of the carbide-based PVC price increase. Some believe the gains are a natural spillover from the stronger ethylene-based market, while others argue that prices may have risen beyond what fundamentals justify.
A trader in Longkou noted that ethylene-based PVC has increased more sharply due to high crude oil prices and bullish sentiment, adding that buyers in North China are increasingly avoiding ethylene-based material due to high costs.
The trader also pointed out that domestic supply remains sufficient while demand continues to lag, particularly due to weakness in the property sector. As a result, buying interest has slowed and transaction volumes remain limited.
Coal dynamics provide partial support
Although carbide-based PVC depends on coal rather than oil or gas, broader energy market shifts have still had an impact. With LNG supplies disrupted and prices rising, Asian utilities have turned more toward coal-fired power generation.
This has pushed thermal coal prices higher in recent weeks, indirectly supporting production costs for coal-based PVC in China. However, the impact remains less severe compared to oil-linked production chains.
Export demand remains active ahead of tax change
Despite higher prices, export activity has remained relatively firm. Buyers across Asia are continuing to secure material amid concerns over further supply disruptions and additional price increases.
Market participants are also reacting to an upcoming policy change, as China plans to remove the 13% export tax rebate on PVC from April 1, 2026. This move is expected to increase export costs and potentially tighten domestic supply.
As a result, some buyers are accelerating purchases ahead of the deadline, while others anticipate that ongoing feedstock constraints and geopolitical risks could further limit availability in the coming weeks.
Stay ahead of market trends with the Credco app. For any queries, please reach out to us via WhatsApp at +918448083211.