For the Quarter Ending September 2023
The North American market experienced a downward trend in Chlorinated PVC prices during the third quarter of 2023, with the product’s prices decreasing by over 10%. This occurred despite a nearly 10% increase in PVC feedstock prices and a 6% rise in Chlorine prices. Declining industrial activities, particularly in construction, due to higher interest rates, led to low demand in the downstream industrial sector. Mortgage rates reached almost 7% for a 15-year term, further impacting construction activities. The subdued demand resulted in a surplus of inventories, which had to be sold at negotiable rates, eroding profit margins. Additionally, weak international demand, especially from importing markets like Mexico and South America, contributed to the overall bearish situation, overshadowing the gradual recovery in the downstream fluid circulation industry.
In the Asian market, Chlorinated PVC prices faced a bearish situation, depreciating by over 15% in the third quarter of 2023. This occurred despite notable increases of 11% and 6% in feedstock prices for Calcium carbide and PVC, respectively. The downstream construction and industrial fluid circulation sector saw minimal demand due to economic uncertainties, with China’s economy entering deflation in July 2023. Industrial activities declined, leading to challenges for major manufacturers in maintaining profit margins. Despite improvements in purchasing sentiments during the Mid-Autumn festival, the oversupplied market persisted, fueled by the financial struggles of major construction firms in Southeast Asia. International demand was also weak, aligning with the poor performance of the construction industry throughout the quarter.
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The European market witnessed a bullish scenario for Chlorinated PVC, experiencing a price increase of approximately 4% in the third quarter of 2023. The primary driver for this increment was the rising prices of caustic soda, appreciating by almost 6%, leading to higher feedstock Chlorine prices. However, demand from the downstream industrial sector remained sluggish due to minimal production rates. Supply chain issues, such as fluctuating water levels in the river Rhine and problems in the German railway system, further contributed to low product supplies. High interest rates and inflation rates around 6% across the Eurozone added to the challenges. The undersupplied market, influenced by increased feedstock prices, reduced industrial activities, and supply chain disruptions, collectively led to a general price increase.
In the South American market, Chlorinated PVC prices decreased by approximately 15%, despite higher production costs in North America. This increase was attributed to elevated feedstock costs, leading to limited import orders from merchants. Low demand in the downstream industrial sector, caused by contracting industrial activities and increased production costs in the United States due to continuous interest rate hikes by the Federal Bank, resulted in minimal procurement activities. Expensive imports, coupled with moderate demand, discouraged merchants from placing bulk orders. Consequently, product consumption rates declined, prompting merchants to clear existing inventories at discounted prices to mitigate the accumulation of products.
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