A recent report from Xinhua News Agency has drawn significant attention within the industry. It highlights that since China imposed anti-dumping duties on polyvinyl chloride (PVC) imports from the U.S., South Korea, Japan, Russia, and Taiwan in 2003, the domestic PVC industry has experienced rapid growth, with an average annual increase in production capacity of 50%. Exports have also grown steadily over the years. However, the export trend hasn't shown a consistent rise in both volume and price. In fact, as exports increased, prices began to decline.
According to customs data cited in the report, in the first half of this year, Tianjin Port exported 5,944 tons of PVC—an impressive 26.7-fold increase compared to the same period last year. The export value reached $4.57 million, up 21.5 times year-on-year. Yet, the average export price dropped to $769 per ton, a decrease of 18.7%. This suggests that while volumes are rising, the industry is facing downward pricing pressure.
Some experts argue that anti-dumping measures can be a double-edged sword, and the domestic PVC market seems to confirm this. Despite high anti-dumping prices and strong demand, it's been difficult to curb the expansion of domestic production capacity. Almost all major chlor-alkali companies are either planning or executing expansion projects. These expansions often rely on small-scale calcium carbide methods, which require less investment, energy, and produce more pollution. Some businesses believe that now is the best time for sales, and if they act quickly, they can capture profits.
In 2004, China’s PVC production capacity reached 6.6 million tons, up by 2.2 million tons from the previous year. In the first half of this year alone, capacity increased by 25% compared to the same period last year, and it's estimated that annual production capacity will reach 9.8 million tons. Many new projects are still under construction or about to launch. Over 60% of these capacities use the calcium carbide process, with nearly half coming from small enterprises producing less than 100,000 tons annually.
This raises concerns about the implementation of the “Tenth Five-Year Plan†for the chlor-alkali industry. Originally, the plan aimed to adjust the raw material routes for PVC and limit the use of calcium carbide methods. It explicitly stated that no new PVC plants using the calcium carbide method should be built. However, in practice, output has far exceeded the planned target of 3.4 million tons, and the “in principle†restriction has not been strictly enforced.
The reason lies in the cost difference between the ethylene and calcium carbide methods. Although ethylene-based PVC has higher quality, lower energy consumption, and less environmental impact, it is currently much more expensive—up to 1,000 yuan per ton more than the calcium carbide method. With limited environmental regulations and low public awareness, the cheaper calcium carbide method remains popular.
But is it wise for small-scale calcium carbide producers to capitalize on this? The recent export data from Tianjin Port warns that China’s PVC production has surged at the expense of the environment and energy consumption. As global markets increasingly prioritize safety and environmental protection, how long can the “price advantage†based on low costs be sustained?
Looking ahead, if global crude oil prices drop or new alternative energy sources emerge, the market for calcium carbide-based PVC could shrink significantly. What will happen to those companies that took advantage of the current situation?
For a long time, the industry has focused more on investment and output figures, neglecting the structural adjustments outlined in the plans. The lack of a clear price increase in PVC exports reveals deep-seated issues in China’s industry restructuring. This indicates that the goals set in the “Tenth Five-Year Plan†have not been fully achieved. But how can responsibility be placed solely on companies? Why weren’t implementation strategies developed alongside the original plans to ensure they don’t remain just on paper?
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