PVC, PTA margins paint gloomy picture for chemical sector

As we dive into the latest trends in the chemical industry, July 2024 has proven to be a challenging month. 

The monsoon season, always a major player in the South Asian market, has once again flexed its muscles, keeping demand subdued and impacting margins across the board.

PVC-Ethylene Margins

The PVC-Ethylene margins took a hit this July, slipping down to USD 333/Ton—a noticeable 6% drop from last month and a staggering 21% year-on-year decline. 

The primary culprit? Lower PVC prices, which dipped to USD 789/Ton from June’s USD 818/Ton. 

This drop can be attributed to a few factors: 

• lower demand driven by the monsoon season
• possibility of a ceasefire between Israel and Palestine
• an oversupply in the Chinese market
• easing freight costs from China

Ethylene prices weren’t left unscathed either. They fell to USD 932/Ton, largely due to the same factors affecting PVC—weak demand in the region.

PTA-PX Margins

On the flip side, not all news was grim. PTA-PX margins rose to USD 110/Ton, up 4% from June and 35% year-on-year. 

This climb occurred despite lower PTA prices, which slipped to USD 798/Ton. The rise in margins can be chalked up to a drop in PX prices, driven by weaker upstream prices and excess inventory.

The Road Ahead:

Looking ahead, the forecast remains cloudy. With further reductions in freight costs expected from China and the continuation of the monsoon season, chemical prices are likely to remain under pressure. 

Moreover, the ongoing typhoon season in China could disrupt shipments from certain ports, adding another layer of uncertainty to an already volatile market.

While the chemical industry navigates through the monsoon blues, market players need to keep their umbrellas handy and eyes on the horizon.