Ceresana's Third Study on the Global Growth Market PVC
Polyvinyl chloride (PVC) is one of the key products of the chemical industry and, in addition to polypropylene and polyethylene, one of the most widely produced plastics. Worldwide, about 39.3 million tonnes of PVC were consumed in 2013. A new study of the market research institute Ceresana expects global demand to increase by about 3.2% p.a. until 2021. With a market share of close to 56%, Asia-Pacific is the by far largest sales market, and also likely to exhibit the strongest growth in the foreseeable future. The North American and Western European markets have returned onto a growth path after incurring severe losses in previous years.
Worldwide PVC Demand Continues to Rise
The construction industry is the prime sales market for PVC products. The Chinese construction industry continues to grow at higher rates than in most other countries, even though dynamics are slowing down somewhat. In addition to China, India is one of the growth motors on the PVC market, demand is projected to increase by 4.9% per year. The USA suffered from weak domestic demand in past years, but are seeing local demand for PVC products rise again, thanks to a more positive development of the construction sector. In Western Europe, the crisis-affected countries along the Mediterranean Sea seem to have reached the bottom of the valley by now, and markets in Germany, France and the United Kingdom remain comparatively stable. Therefore, consumption of PVC in Western Europe is projected to rise again by about 1% in upcoming years.
Dynamic Market for PVC
US producers of PVC have been able to offset low domestic demand by a considerable increase of export volume, as feedstock costs in the USA fell notably due to the shale gas boom US manufacturers could capitalize on low prices when competing on the international market.
In Europe, weak demand in recent years led to high market dynamics: Small and medium sized producers were either acquired by competitors or disappeared from the market. As a result, individual countries, e.g. Italy, ceased producing PVC altogether. While some large-scale manufacturers like Arkema sold their PVC business, Solvay and INEOS merged their divisions: The joint venture Inovyn is expected to become operational at the end of 2014. Market researchers at Ceresana believe the founding of this by far largest European PVC manufacturer to be yet another sign of increasing pressure for market concentration.
While capacity utilization in North America and Western Europe is very high already, Asia-Pacific in particular is still exhibiting notable excess capacity. China, the worldwide largest manufacturer of PVC, is therefore capable of increasing output without any trouble at all in order to satisfy rising domestic demand. Chinese producers mainly rely on coal-based vinyl chloride to manufacture PVC, whereas other countries, for example the USA, are exclusively using ethylene-based vinyl chloride.
PVC Applications Vary
Among the most important PVC products are pipes and conduits, at a considerable distance followed by plastic PVC profiles as well as films and sheets. Other applications accounting for noteworthy shares of PVC demand include cables and cable sheathing as well as floorings. Other industrial applications are automotive coatings, medical products like infusion bags, and shoes. While development of individual application areas will remain highly balanced in the upcoming eight years, there are various differences to be seen when it comes to world regions. Asian-Pacific countries, first and foremost India and China, and the Middle East produce a comparatively large amount of PVC pipes. Turkey and Russia, on the other hand, report a high output share for profiles, resulting in Eastern European demand for PVC being highest in the segment profiles. Germany also utilizes the majority of its PVC to produce profiles; the German market is currently profiting from the boom of energy efficient refurbishment.
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