May 2023: Weak demand and economic challenges weigh down North American PVC prices

In May 2023, the North American #polyvinyl #chloride (#PVC) prices declined due to various factors including weak demand in the #construction industry, production challenges, and fluctuations in upstream ethylene prices that impact PVC pricing dynamics. The region's PVC prices have been continuously falling for two consecutive months and are expected to continue to decline in June.

This drop in demand is primarily attributed to the slowing of the US residential construction industry. Its use in #pipes, #wallboards, and other related building products accounts for a large portion of PVC consumption. Recent interest rate hikes have negatively impacted the construction market, resulting in reduced PVC demand.

These #market dynamics highlight the challenges faced by the plastics industry in adapting to constantly changing economic conditions and demand patterns. With the increase in borrowing costs, the highly rate-sensitive construction industry has been particularly affected. These restrictive financial conditions and inflation have weakened consumer purchasing power, leading to fewer activities affecting the trend of North American PVC prices.

Based on the latest meeting of the Federal Reserve, it is expected that the US economy will enter a mild recession towards the end of this year. The tightening of bank credit conditions and already tense financial conditions could lead to an economic downturn while a moderate recovery is foreseen afterward.

It is widely believed in the market that PVC prices are likely to continue their downward trend in June 2023 due to weakened consumer confidence amid the economic challenges facing the regional markets, which could slow down North American construction industry orders.