Polyvinyl Chloride Demand in China Climbing While Slumping Elsewhere in East Asia

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Researched by Industrial Info Resources East Asia (Kofu-shi, Japan)--Polyvinyl chloride (PVC) is one of the most widely used plastics, following polyethylene and polypropylene. It has a variety of applications, ranging from construction to textiles and clothing. Though North American remains one of the largest producers of PVC, the overwhelming majority of new PVC production activity is taking place in Asia, China in particular. In turn, the same goes for PVC's upstream source, vinyl chloride monomer (VCM).

Between 2003 and 2009, China's PVC production capacity rose from 5 million tons per year to 15 million tons per year. Chinese domestic demand alone reached 12 million tons in 2010 and is projected to reach 13 million tons by the end of this year. New PVC activity investments in Asia account for approximately $11.4 billion, according to Industrial Info, and China currently makes up 86% of those investments. One of the largest projects now under construction in China will boost the country's annual PVC capacity by 400,000 tons by the end of next year.

By comparison, other countries in East Asia, including Japan and South Korea, are experiencing sluggish PVC sectors due to poor domestic demand. South Korea is fairing better than Japan and is expanding, though very slowly.

Japan's poor PVC sector is prompting the demolition of existing production sites like those of V-Tech Corporation, the now defunct subsidiary of Mitsubishi Chemical Holdings Corporation (TYO:4188) (Tokyo). Mitsubishi chose to dissolve V-Tech, which was well known for its PVC, after the domestic market slumped. Both of V-Tech's former production sites are now currently being dismantled.

Despite the slump of in PVC demand, demand for VCM is still high. Both Mitsubishi and Tosoh Corporation (TYO:4042) (Tokyo) have the largest market shares in VCM production and export to other areas of Asia. Japan's VCM capacity is currently at 3.5 million tons per year, with Tosoh accounting for approximately 34% produced at the Nanyo petrochemical complex in Yamaguchi prefecture. Tosoh plans to expand the facility soon, though plans maybe expedited due to a large fire at VCM Unit 2 on November 13.

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