Following its historic price peak driven by China's dual-control energy consumption policy in 2021, the PVC market entered a prolonged bear market spanning several years. This downturn was fueled by factors including falling coal prices, concentrated release of new production capacity, and weakness in the real estate sector. By Q4 2025, the market persisted in a pattern of ample supply, weak demand, and high inventories, with prices repeatedly hitting new lows. Entering 2026, multiple positive factors converged to present PVC with a bottoming-out and rebound opportunity. Prices exhibited a pattern of oscillating recovery after bottoming out, followed by rapid growth. The trading logic shifted from being solely supply-demand driven to being dual-driven by marginal supply-demand improvement and cost support.

I. Significantly Enhanced Cost Support Solidifies Price Foundation

Cost dynamics emerged as the primary driver behind PVC's recent rally, with substantial fluctuations in international oil prices directly impacting the PVC supply chain to form robust support.

(1) Crude Oil and Ethylene Price Synergy Drives Cost Increases

Geopolitical tensions drove international oil prices sharply higher, with March prices surging rapidly and directly pushing ethylene prices upward. Through the transmission chain of “crude oil → ethylene → vinyl chloride monomer,” PVC cost support has been continuously reinforced: profits for ethylene-based PVC plants have rebounded, while losses for calcium carbide-based PVC plants have narrowed. Both factors provide rigid support for PVC prices.

(II) Mid-Term Geopolitical Risks Continue to Elevate Oil Price Benchmarks

The next three weeks represent a critical window for easing U.S.-Iran tensions, potentially leading the market into a consolidation phase. Should the U.S. ease sanctions on Russia, its crude production recovery would take approximately three weeks, potentially reversing tight supply expectations. However, from a medium-to-long-term perspective, escalating geopolitical conflict risks drive crude oil price fundamentals upward through three dimensions: First, heightened geopolitical risk premiums and rising shipping insurance costs increase crude oil trade expenses. Second, nations proactively expanding strategic petroleum reserves temporarily boost crude demand. Third, refinery facility damage and Gulf nations enhancing security redundancy impose short-term supply constraints, while long-term investment shortfalls and industrial restructuring further limit supply growth.

(3) Cost pressures drive industry maintenance and supply contraction

If international oil prices remain strong and volatile, rising raw material costs and compressed margins will force approximately 30% of China's ethylene-based PVC plants to undergo maintenance or shutdowns. This will reduce global PVC supply, further amplifying cost support. Simultaneously, factors like geopolitical conflicts, rising oil prices, and increased shipping costs are heightening expectations of supply contraction from overseas PVC plants, providing external support for domestic PVC prices.

II. Marginal Improvement in Fundamentals, Narrowing Supply-Demand Gap

Although the PVC market still faces pressure from high inventories, expectations of supply contraction and signs of demand recovery are driving marginal improvement in fundamentals, providing core momentum for price increases.

(1) Supply Side: Zero New Capacity + Maintenance Eases Pressure

No new domestic PVC capacity will be added in 2026, achieving “zero incremental supply” and fundamentally alleviating long-term oversupply pressures. Current industry operating rates remain above 80%. While inventories remain elevated, the approaching spring maintenance season in April is expected to alleviate supply pressure to some extent. Although this is unlikely to completely reverse the oversupply situation, it can marginally improve the supply-demand balance. Meanwhile, geopolitical uncertainties may further disrupt the commissioning pace of domestic PVC facilities and the industry's consolidation process.

(II) Demand Side: Marginal Growth Amid Weak Recovery

Demand exhibits characteristics of “weak recovery with emerging bright spots.” While the domestic real estate market remains volatile, countercyclical regulatory policies have driven a moderate improvement in the macroeconomic environment, providing foundational support for PVC demand. Marginal demand improvement in emerging sectors, particularly service consumption emerging as a new growth engine, is offsetting the impact of traditional real estate sector weakness.

(III) Export Front: Seizing Export Window Creates Incremental Opportunities

Adjustments to export tax rebate policies in early 2026 have created a “rush export” window, with PVC exports expected to see both volume and price increases in Q1. Overseas markets benefit from global liquidity easing driving manufacturing restocking demand and capital expenditure growth. Rapid development in Belt and Road partner countries and emerging markets like India offers vast export potential for PVC. Concurrently, rising international oil prices have prompted production cuts at overseas ethylene-based PVC plants, highlighting the cost advantage of China's calcium carbide-based PVC facilities and providing a significant short-term boost to exports. However, long-term risks warrant caution: excessively high oil prices could dampen global demand, thereby weighing on export performance. Furthermore, once the export tax rebate policy is phased out, the benefits from the export rush will gradually diminish.

III. Market Outlook: Short-term firm volatility, long-term return to equilibrium

The current PVC market exhibits core characteristics of “strengthened cost support, persistent supply pressure, weak demand recovery, and elevated inventories”. Price movements show phased divergence, necessitating multi-dimensional tracking of key variables.

(i) Short Term: Geopolitical Tensions Dominate, Prices Show Strong Volatility

In the near term, ongoing geopolitical conflicts keep PVC production costs elevated. Coupled with heightened expectations of overseas supply contraction, prices are likely to maintain a generally firm and volatile trajectory. Market volatility may intensify further, necessitating close monitoring of three core variables: firstly, the pace of inventory changes – rapid destocking would reinforce the upward trajectory; secondly, the sustainability of ”export rushes“ – sustained high export volumes would further reduce inventories; thirdly, the procurement rhythm of downstream enterprises – concentrated restocking demand could drive prices up rapidly.

(2) Medium Term: Demand Recovery Takes Centre Stage, Maintenance Schedules Become Key Variable

In the medium term, the pace of domestic demand recovery will become the core driver of PVC price movements. The timing and intensity of spring maintenance will directly influence the extent of supply pressure relief. Close attention should be paid to changes in the external macro environment (such as global liquidity and geopolitical tensions) and cost-side disruptions. Should demand recovery outpace supply contraction, prices may rise further.

(III) Long Term: Capacity Clearance Materialises, Supply-Demand Returns to Rationality

Long-term, the pivotal inflection point for the PVC market lies in the comprehensive realisation of industry capacity rationalisation and demand recovery. Should inefficient capacity accelerate its exit, export structures continue to optimise, and domestic demand from real estate and emerging sectors fully materialise, the market's supply-demand dynamics will gradually balance. PVC prices are expected to return to a reasonable range, transitioning from a “bottoming out and recovery” phase to ”steady operation“.

As an integrated internet platform providing benchmark prices, on March 12, SunSirs' benchmark PVC price was 5,400.00 RMB/ton, an increase of 17.67% compared to the beginning of the month (4,589.00 RMB /ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.