North America

In the third quarter of 2023, the Vinyl Chloride Monomer (VCM) market in North America faced a significant price decline. This was driven by weakened international demand, an excess of stock, and a consistent decrease in offers during the initial half of the quarter. The sluggish overseas buying interest and subdued local market activity contributed to this trend. The decline in North American VCM prices was further aggravated by plant shutdowns in downstream PVC-producing units in August 2023. The reduced offtakes for VCM in Asian markets played a crucial role in shaping the negative market outlook for the US VCM price momentum. Industry insiders responded by reducing production run rates to address abundant supplies and buyer reluctance. In September 2023, the US VCM market continued to face challenges due to lackluster international sales and product oversupply. Traders resorted to selling below producer price levels, leading to a substantial drop in overseas offers and weak regional demand as the primary factors behind the significant VCM price slump. According to data from FRED, the producer price index continued its descent, standing at 319.62 in September 2023.

APAC

In the Asian market, VCM prices showed an upward trend in the third quarter ending September 2023. This was influenced by increasing import prices in a market with limited supply to meet regional demand. Market participants anticipated a surge in downstream procurement activity ahead of the festive season in Q4 in India. However, purchasing enthusiasm in the Asian market was initially limited, with traders selling material below producer price levels. The VCM prices were mainly driven by reduced production rates in exporting countries, including the USA and Japan. The maintenance plant shutdown at Formosa Plastics Corporation in the USA significantly impacted the VCM price trend by increasing the costs of importing. The VCM price trend experienced a positive revival this month due to a rise in seasonal consumption in downstream segments and high production costs. According to data from the government of India, the CPI fell marginally during the previous month, assessed at 186.2 (August 2023) compared to July, reflecting similar market sentiments for September.

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Europe

In the third quarter of 2023, the European VCM market witnessed a period of price stability. As regional participants returned from summer vacations, cautious pre-purchasing activities among buyers and manufacturers maintaining VCM prices at a modest level contributed to this stability. The PVC industry faced procurement challenges in August due to high-interest rates, negatively impacting VCM consumption in the first half of the quarter. In September 2023, upstream Ethylene prices gradually increased, reflecting rising crude oil futures and adding cost pressures for VCM producers. Inflation, driven by the European Central Bank's interest rate hike to combat inflationary pressures, further complicated production concerns. Faced with these challenges, sellers in September 2023 chose to keep commodity prices relatively low to moderate. The downstream PVC market experienced minimal price fluctuations in September, driven by steady downstream construction demand, consistent international inquiries, and low inventory levels. Economic and geopolitical uncertainties, along with tightening financial conditions, negatively affected demand, with the economic sentiment index in the Eurozone gradually declining during the quarter.

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