During the Spring Festival holiday, international oil prices surged significantly, providing cost support for chemical products. However, weighed down by its own weak fundamentals, PVC opened slightly lower on the first trading day after the holiday. Subsequently, buoyed by rising oil prices and technical support from previous lows, it fluctuated higher.

Valuation Recovery Expectations Strengthen

In recent years, the PVC industry has been mired in persistent losses, particularly for externally procured calcium carbide-based PVC, with losses exceeding 1,000 yuan per ton at times. However, since most PVC producers operate integrated chlor-alkali facilities, profits from caustic soda operations often offset PVC losses. Consequently, even with significant PVC losses, the cost-side support has failed to materialize effectively.

Since the second half of 2025, caustic soda prices have continued to decline, significantly compressing profit margins and making it difficult to cover PVC losses, resulting in negative overall chlor-alkali profits. Against this backdrop, chlor-alkali enterprises faced mounting loss pressures, leading to signs of reduced production capacity utilization. Additionally, commodity market sentiment gradually improved in the latter half of 2025, with valuations of some deeply depressed commodities beginning to recover. After hitting historic lows amid severe losses, expectations for PVC's valuation recovery significantly strengthened, driving its price gradually out of the bottom range.

On January 9, the Ministry of Finance and the State Taxation Administration jointly issued the “Announcement on Adjusting Export Tax Rebate Policies for Photovoltaic and Other Products,” explicitly including PVC powder, unplasticized PVC, and plasticized PVC within the scope of adjustments. Effective April 1, 2026, the VAT export tax rebate for PVC powder will be abolished. Currently, the export tax rebate rate for PVC stands at 13%. After the policy takes effect, PVC products exported on or after April 1 will no longer qualify for rebates, while goods shipped before April 1 may still apply for rebates under the original policy. Anticipating rising costs post-rebate cancellation, foreign buyers have recently expanded their procurement volumes, prompting domestic PVC producers and traders to simultaneously increase exports. This surge has significantly boosted PVC export orders in the first quarter, injecting strong momentum into the market.

2025 marks the year with the most intense capacity expansion pressure for PVC in nearly a decade, with over 2 million tons of new capacity added annually, driving a substantial increase in the production base. Entering 2026, operating rates have rebounded significantly, currently hovering near 80%. Weekly output has surpassed 500,000 tons, setting a new historical high for the same period, with supply pressure continuing to mount.

However, demand stalled around the Spring Festival period, starkly contrasting with the relentless supply growth and driving social inventories to persistently high levels. Latest data indicates domestic PVC social inventories have exceeded 1.25 million tons, once again breaking historical records.

Weak demand has become the norm

Approximately 80% of PVC's downstream demand structure is closely tied to real estate and infrastructure. However, the overall downturn in the real estate sector in recent years, coupled with lackluster performance in infrastructure, has severely dampened PVC demand. Data from the National Bureau of Statistics shows that in 2025, national real estate development investment reached ¥8.28 trillion, a year-on-year decrease of 17.2%; New commercial housing sales area reached 881 million square meters, down 8.7%; sales value totaled ¥8.39 trillion, down 12.6%; and unsold commercial housing area at year-end stood at 766 million square meters, up 1.6% year-on-year. Despite frequent policy stimulus measures in recent years, these benefits have struggled to effectively reach end-users and generate tangible demand growth, making PVC demand weakness the new normal.

In recent years, the intensifying imbalance between domestic PVC supply and demand has driven domestic prices to become a global low point, opening an export window and leading to a significant increase in export volumes. Data indicates that PVC exports in 2024 are projected to exceed 2.6 million tons, with a substantial increase to over 3.8 million tons in 2025, representing a year-on-year growth of 46%. However, the export tax rebate policy is poised to change. While its cancellation briefly spurred a “rush to export” phenomenon, the policy's official implementation on April 1 will increase PVC export costs by 13% (approximately $80/ton), weakening its price advantage. Export volumes are expected to be significantly constrained, thereby exacerbating domestic supply-demand imbalances.

In the market, PVC rebounded after hitting a historic low, buoyed by valuation recovery and the “rush to export” effect. However, with the export tax rebate cancellation now in effect, increased export costs and greater export difficulties mean this short-term boost is unlikely to persist. Looking at the fundamental supply-demand dynamics, the contradiction between rising supply and weak demand remains, leaving PVC facing significant long-term upward resistance.

As an integrated internet platform providing benchmark prices, on February 25, the SunSirs PVC benchmark price was 4693.00 RMB/ton, an increase of 1.14% compared with the beginning of the month (4640.00 RMB/ton).

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