A Bleak Outlook for European PVC; Grey Costs Are Not Competitive; Clean Is Out of Reach

Companies Mentioned: PVC, Caustic Soda, Phenol, Acetone, Propylene Oxide, Lithium, Crude Oil, Natural Gas, Methane, Naphtha, Ethane, Hydrogen, Carbon, Ammonia, Aluminum, Chlor-Alkali
Commodities Mentioned: Westlake, Occidental, Shin-Etsu, Formosa, Olin, Air Liquide, Avient, Arakawa Chemical, Chemours, Chemanol, Ecolab, Ineos, LG Chem, LG Energy Solution, OCI, Shell, Sumitomo Bakelite, Toyobo, Vopak, W.R. Grace, Wesfarmers Chemicals, Dow, Innospec, DIC, Nagase, BP, Carnival, Chesapeake, Google, Keyera, QatarEnergy, Woodside Energy, Williams, MOL, HD KSOE, Hyundai Glovis, Plug Power, Statkraft, Baxter

Key Findings

General Thoughts: The North American polyvinyl chloride (PVC) market benefits from a low-cost production position, enabling the continued profitable production push towards Europe and other high-cost regions.
Supply Chain/Commodities: We discuss domestic PVC production stats from early 2024, why integrated PVC economics for US producers will likely be equal or better YoY for most of 2024, and our Europe and Asia views.
Energy/Upstream: With US natural gas outpacing ex-US natural gas prices lower and crude oil prices reflecting relative support, we discuss the US Chlor-Vinyl producer cost advantage in both ethylene and Chlor-alkali.
Recycled/Renewable Polymers: We discuss the greater durability of PVC relative to other polymers, recycling efforts, and many challenges facing PVC value chain decarbonization, with green power sourcing among them.
Downstream/Other Chemicals: We discuss PVC end-demand market characteristics, its significant end-use in building & construction applications, end-user and macro indicators, and we flag other relevant sector news.

Exhibit 1: US PVC spot values are higher than their 2019 and 2023 average, but this is not true in Asia and Europe.