The blog continues this week’s special series on chloralkali and PVC markets by looking at EU developments on PVC.
Historically the EU has had strong export positions into markets such as Turkey and Russia, which lack major local production. More recently, as in the USA, strong export demand for caustic soda and weak domestic demand for PVC into housing led to an increased focus on PVC exports.
This created direct competition with US exporters. And helpfully, the US switch to ethane as an ethylene feedstock provided a silver lining for EU producers. US output of propylene and butadiene has been reduced by the switch to ethane feeds, and so overall EU cracker margins have been supported by higher co-product prices for both products.
Thus as the chart shows, based on GTIS (Global Trade Information Services) data, the EU has also been able to increase PVC exports:
• EU net exports of PVC rose 24% from 508KT to 631KT between 2006-8
• They then grew a further 51% to 954KT by 2011
• Overall, net exports rose 88% between 2006-11
GTIS data also provides a fascinating picture of the main battlegrounds:
• The US maintained net exports of ~325KT into China between 2009-11 (yesterday’s post gives details). EU volumes have fallen from 108KT to 17KT over the same period
• The US has also boosted net exports to Russia from 30KT to 209KT, whilst EU volumes grew only 35KT
• But the EU has done better in Turkey. Its net exports more than doubled from 221KT to 494KT, whilst the US saw only a 60KT increase to 192KT
Overall, therefore, China’s stimulus programme has compensated for the downturn in US/EU housing markets. It created major demand for caustic into mining-based economies, as well as for PVC in their housing markets and in China itself.
Today, however, there are worrying signs that this virtuous circle is ending, as China’s economy slows. GTIS data shows EU 2012 PVC exports to the end of February were slightly down at 171KT. This confirms the slowing trend seen for US caustic and PVC exports discussed on Tuesday and Wednesday.