China's PVC exports face challenges

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China CAMC Engineering Co. Ltd. The Aug. 19 signing ceremony marking China CAMC Engineering Co. Ltd.'s plan to build PVC capacity in Uzbekistan.

Despite robust growth in the first half of the year, China’s PVC exports now faces new challenges, due to trade barriers and new capacity ramping up in other countries.

China exported about 740,000 tons of PVC resin in the first seven months of the year, more than double from the previous year, according to statistics from the General Administration of Customs. In fact, that number has already exceeded the 2013 full year export of 660,000 tons.

However, pressure is mounting from the two largest export destinations — India and Russia.

India has raised its antidumping charges on Chinese PVC resin to $91-$148 per ton. The charges were in the range of $8-$45 per ton prior to an April announcement by the India government.

As a major growth engine in the global PVC market, demand in India is projected to increase at an average annual rate of 5 percent, according to a Ceresana market study published last month.

Second only to India, Russia is China’s second largest PVC export market, representing 15 percent of China’s total PVC exports, according to a research report from Tang Xiao at GF Securities.

But the volume and pricing of PVC resins exported to Russia are pointing down, as several analysts noted, for a host of reasons. For one, Russia has been building domestic PVC capacity. The 330,000-ton RusVinyl project in Kstovo began trial production this month, on track to go on stream by the end of the year. The 1 billion euro project is a 50:50 joint venture between Russian petrochemicals group Sibur and the Solvay/BASF partnership SolVin.

Some Chinese exporters already reported lower orders for August, analyst Zhao Yuru at Beijing-based JYD Online Co. Ltd. said in a report. The impact will likely be felt most by PVC makers in the northwestern China such as Xinjiang Tianye Co. Ltd. and Xinjiang Zhongtai Chemical Co. Ltd.

Competition from the rest of Asia, Europe and the United States is adding to the pressure, Zhao said.

New capacity also is looming from countries like Uzbekistan. China CAMC Engineering Co. Ltd. announced this week that it will build a chemical complex that includes of 100,000 tons of PVC capacity for Uzbekistan’s chemical firm Navoiazot. The construction is expected to last 36 months.

Last week, Brazil also announced an extension of antidumping charges — at 21.6 percent — on PVC from China through August 2019.

Even so, JYD’s Zhao said opportunities still exist for China’s PVC exporters. For instance, established channels, steady supply and booming border trade between Russia and China can bring positive impact.