In 2025, the polyvinyl chloride (PVC) market struggled under the dual pressures of low prices and oversupply. According to data monitored by the BuyChemPlastics Research Institute, by the end of 2025, the price of Type 5 PVC in East China was around 4,500 yuan/ton, a 10% decrease from the beginning of the year's price of 5,000 yuan/ton.

However, entering 2026, driven by multiple factors including rising expectations of production cuts, the implementation of policy adjustments, and regional market differentiation, PVC market prices rebounded significantly. On January 6th, the main PVC futures contract opened higher and continued to rise, with an increase of over 3%, while spot prices rose by approximately 120 yuan/ton.

In the capital market, stocks related to the PVC industry chain also showed a coordinated upward trend. Among them, Zhongtai Chemical (7.350, -0.40, -5.16%) (rights protection) and Chlor-Alkali Chemical (14.470, 0.17, 1.19%) quickly hit their daily limit after opening. Xinjiang Tianye (6.510, -0.14, -2.11%) and Junzheng Group (6.070, 0.11, 1.85%) opened higher and fluctuated before hitting their daily limit. Erdos (16.640, -0.54, -3.14%) rose by more than 8%, Wanhua Chemical (88.470, -2.62, -2.88%) rose by nearly 8%, and Beiyuan Group (4.250, -0.04, -0.93%) rose by 5%.

However, judging from the current market situation, various factors are still in a state of flux, and the future trend of PVC prices remains uncertain. This article will analyze the development trajectory and future trends of the PVC industry from four dimensions: supply and demand dynamics, cost drivers, policy impacts, and regional market characteristics.

Supply and Demand Dynamics: Oversupply Pressure Remains Unresolved, Production Cut Expectations Continue to Rise

In 2025, although global PVC trade volume approached record export peaks, prices fell to a 20-year low, leaving most producers in a loss-making situation. The core contradiction of oversupply remained unresolved. Entering 2026, a substantial turning point in demand is unlikely. Nearly 80% of PVC downstream demand is concentrated in the real estate sector, and the slow recovery of the real estate market has led to continued weak demand. Although the overall operating rate of downstream industries is higher than historical averages, companies' purchasing intentions are weak, making it difficult to effectively support PVC prices.

On the supply side, calls for production cuts continue to rise, becoming the core focus of the market. In December 2025, Westlake Chemicals in the United States shut down a PVC plant, firing the first shot in global PVC production cuts and clearly signaling that the industry's cost and profit structure is unsustainable. The Asian market is facing increasing pressure from oversupply, with some marginal factories already operating at a loss, significantly increasing the likelihood of production cuts within the region. While no US producers have publicly adjusted their operating rates yet, the price stabilization effect from previous plant maintenance has led traders to expect a continuation of the tightening supply trend. If the US PVC operating rate remains around 80%, the Latin American market is expected to achieve a tight balance; if the operating rate rebounds, its PVC products will directly compete with Asian PVC in the African, Middle Eastern, and Indian markets.

Regarding inventory, current PVC plant inventories and social inventories are at neutral levels, but inventories are expected to increase year-on-year by the end of 2025. Coupled with the planned addition of approximately 300,000 tons of new capacity in 2026, even with a significant slowdown in industry capacity growth, maintaining high output is highly probable, and the pressure of supply-demand imbalance will persist.

Cost-Driven Factors: Calcium Carbide Prices Play a Dominant Role, Electricity Price Adjustments a Potential Variable

In the cost structure of PVC production, calcium carbide costs account for 65%-70% of the total cost of calcium carbide-based production, making it the core factor determining PVC costs. The electricity consumption per ton of calcium carbide production is as high as 3000-3400 kWh, and its price fluctuations are directly transmitted to the PVC market through the cost side. Meanwhile, because PVC and caustic soda are produced using a chlor-alkali co-production process, PVC output is somewhat passive, and the transmission of deteriorating industry profits to output is relatively delayed. In 2025, the gross profit margin for PVC produced via the calcium carbide method had fallen to -500 yuan/ton, indicating a severe loss situation for the industry.

The implementation of differentiated electricity pricing policies has become a key potential factor affecting PVC costs. Currently, some regions have introduced preliminary policies, imposing a 0.1 yuan/kWh surcharge on electricity prices for restricted high-energy-consuming production capacity. If this policy is implemented nationwide, PVC production costs will further increase. Based on a 0.1 yuan increase in electricity prices, the cost per ton of PVC will increase by 512 yuan. This will further exacerbate industry losses and may trigger a transmission chain of "losses – liquid chlorine price reduction – declining profits for chlor-alkali co-production units – tightening output," providing temporary support for PVC prices. In addition, the rebound in crude oil prices has also created short-term positive sentiment in the PVC market, but its substantive impact on the industry's fundamentals is relatively limited.

Policy Disruptions: The Dual Effect of Trade Barriers and Industry Regulation

At the international trade policy level, US PVC exports face multiple tariff obstacles. From January 2026, the EU will impose a fixed anti-dumping duty of 58%-77% on US PVC, directly weakening the market competitiveness of US PVC products. Mexico has initiated an anti-dumping investigation into US suspension polymerization PVC, further increasing the uncertainty of global PVC trade flows. While global PVC trade volume is projected to remain high in 2026, tariff barriers will reshape regional trade patterns. For example, Brazil, due to tariffs imposed on PVC from the US and Asia, has shifted its procurement focus to tariff-exempt countries such as Colombia, Argentina, and Egypt.

Domestically, the deepening and promotion of differentiated electricity pricing policies has become an important path for supply-side reform. This policy guides optimal resource allocation through refined price signals, forcing energy-intensive enterprises to carry out energy-saving renovations or exit the market, which will promote the optimization and upgrading of the PVC industry structure in the long term. However, in the short term, policy implementation faces multiple challenges, including local tax revenue and employment pressures. Furthermore, existing policies suffer from overlapping tools and outdated pricing standards, so their actual impact on PVC supply still needs further observation.

In addition, policy changes in the Indian market have attracted widespread attention. The withdrawal of new PVC quality control regulations and the failure to extend the anti-dumping investigation period after its expiration have led to one of the largest declines in Indian PVC prices globally, introducing new uncertainties into the adjustment of global PVC trade flows.

Regional Markets: Intensified Differentiation, Key Variables Emerge

The global PVC regional market exhibits a clear differentiation. In Europe, progress in the Russia-Ukraine peace talks is expected to boost PVC consumption due to post-war reconstruction demand, maintaining a cautiously optimistic market sentiment. The Indian market has become the key variable influencing PVC price trends in 2026, although the lifting of control measures increases the likelihood of US PVC gaining more market share in India.

The US market faces export tariff pressure on one hand, and production cut expectations on the other, supporting market confidence. Maintaining a tight supply-demand balance will provide some support for PVC prices.

The PVC market in 2026 will be characterized by a complex interplay of supply and demand dynamics, cost pressures, and policy disruptions. In the short term, production cut expectations and cost support may drive a temporary rebound in PVC prices, but weak demand and inventory pressure will limit further price increases. In the long term, the implementation pace of differentiated electricity pricing policies, the recovery process of the real estate sector, and changes in the international trade landscape will be the core variables determining market trends. For market participants, it is necessary to pay close attention to the implementation of production cuts, the strength of policy enforcement, and changes in regional demand, and to carefully seize short-term market opportunities.