PVC resin market facing anti-dumping investigation from India

The longest period for anti-dumping investigations is within 18 months, and the impact is expected to be concentrated in the second half of 2025.

On the eve of the Qingming holiday, the main domestic PVC futures contract 2405 saw a significant decline in price, with a drop of nearly 5% in 10 trading days, approaching the low point of the year.

On the news side, the Ministry of Commerce and Industry of India (MOC) notified on March 26 to launch anti-dumping investigations against PVC imports originating in China, Indonesia, Japan, South Korea, Taiwan, China, Thailand and the United States.

From the quantity of China's exports to India, the impact of its anti-dumping measures on China is significant. Starting from 2022, India's imports from China have significantly increased, with exports reaching 1.0929 million tons by 2023, accounting for 48.08% of China's total exports.

The longest period for anti-dumping investigations is within 18 months from the date of announcement of the decision to initiate the investigation, which means that the final result of this investigation will be announced no later than September 2025.

Not for the first time

Looking at the historical events, the time from the announcement of the investigation to the final results is around 18 months. It is estimated that the final verdict of the sunset review of this anti-dumping investigation is likely to be announced from the third quarter to the fourth quarter of 2025. Therefore, the impact of this event on the import of the Indian market in 2024 is relatively limited, and the main impact is expected to be concentrated in the second half of 2025.

As one of the fastest developing countries, India has enormous potential in infrastructure construction, rapid agricultural development, and huge demand for PVC pipes. In recent years, the consumption of PVC has grown rapidly.

However, India's PVC self-sufficiency is relatively low, and its dependence on foreign imports is increasing. At the same time, India has been continuously launching anti-dumping protection policies due to the impact of sufficient foreign supply and price advantages.

As early as November 2009, the Indian Ministry of Commerce launched an anti-dumping investigation into Chinese PVC resin products. On July 26, 2011, Indian customs issued a notice imposing anti-dumping duties on PVC resin products imported from China to India. The minimum price for Chinese products is 1707 US dollars per ton, and the tax period is 5 years (until July 25, 2015).

In October 2012, India launched an anti-dumping sunset review investigation on suspension grade PVC originating in Chinese Mainland, Taiwan, China, Indonesia, Japan, South Korea, Malaysia, Thailand and the United States.

On April 4, 2014, India made a final antidumping sunset review on suspension grade PVC originating in Chinese Mainland, Taiwan, China, Indonesia, Japan, South Korea, Malaysia, Thailand and the United States, in which the anti-dumping measures against Korean products involved were cancelled, other countries (regions) implemented new anti-dumping duties, and PVC manufacturers in Chinese Mainland were subject to anti-dumping duties of at least US $61.25/ton and at most US $147.96/ton.

In addition, on July 19, 2019, the Indian Ministry of Commerce issued a notice announcing the second anti-dumping sunset review ruling on suspended grade PVC (polyvinyl chloride) resin originating from China. Seven Chinese responding companies were all awarded anti-dumping duties of $61.14 per ton.

The Indian Ministry of Commerce stated in its final ruling that this measure will only continue for 30 months. That is, the policy will expire on February 19, 2022.

In February 2022, India's anti-dumping policy (ADD) on PVC imports originating from China and the United States has expired, and the Indian government has not announced any new policies.

Domestic enterprises incur losses
Although the anti-dumping wave caused by India once again will not have a direct impact on the supply and demand of the PVC market for the time being, with the overall decline in market prices in recent years, the profitability of PVC enterprises is not optimistic.

At present, the PVC resin market in China is in a stage of oversupply. The mainstream price of PVC powder in the East China region is between 5500 yuan/ton and 5600 yuan/ton, with a basis difference between -200 and -280 yuan/ton, still showing a state of low-priced shipment.

Starting from the second half of 2021, the overall profitability of domestic PVC enterprises has declined. Although there has been a short-term profit during the calcium carbide method PVC resin period, the overall gross profit has been negative for a long time, and the ethylene method PVC powder has been profitable for a long time.

Since January 2024, although the prices of ethylene and vinyl chloride in Northeast Asia have rapidly increased, PVC prices have remained weak, leading to a gradual decline in the profit level of ethylene based PVC resin.
By the end of March, domestic PVC production enterprises had been operating at a loss in gross profit. The average gross profit of national sample carbide production enterprises this week was -310 yuan/ton, a decrease of 35 yuan/ton month on month and 246 yuan/ton year-on-year; The average gross profit of domestic ethylene based PVC production enterprises is -221 yuan/ton, a decrease of 172 yuan/ton month on month and 534 yuan/ton year-on-year.

Due to high production in the PVC powder industry, the supply side's production is at a high level. In the first quarter of 2024, the cumulative production reached 5.9175 million tons, a decrease of 1.4% month on month and a year-on-year increase of 4.94%. In 2024, the inventory reduction in the industry was slow, and as of the end of March, the PVC resin industry's inventory was 1.1678 million tons, an increase of 1.06% month on month. From the demand side, the performance of the real estate industry has been sluggish since 2022, directly affecting the demand for PVC hard products. The phenomenon of holidays and festivals has been transmitted from profile enterprises to the PVC pipe industry. Based on the orders of sample PVC pipe profile enterprises nationwide, after the weakening of demand from real estate enterprises, relying on infrastructure and water conservancy pipeline engineering cannot make up for the loss of PVC pipe types. Therefore, in 2024, the more obvious manifestation is the shrinking demand of hard product enterprises.

When will the price stabilize?

With the warming of the national climate, the market placed hopes on the PVC resin industry in April due to the supply side contraction brought by the spring inspection.
According to data statistics, the current maintenance plan for PVC powder production enterprises in the second quarter involves a production capacity of 6.43 million tons. In April 2024, it is expected that the maintenance capacity of domestic PVC resin production equipment will be 4.86 million tons, and the estimated loss caused by routine maintenance in April will be 26721 million tons. The domestic PVC resin production in April may be around 1.888 million tons, a decrease of 6.4% compared to March.

Although spring inspection provides some support for the market from the supply side, considering the reality of large inventory and the digestion of old goods after warehouse receipt cancellation, the price limit of PVC resin has always been limited. Anchoring the upper limit of export prices and the comprehensive profit side, it is expected that PVC powder prices will have bottom support from spring inspections in the short term, and the mainstream price of PVC SG5 in East China will have support around 5450 yuan/ton. With the gradual digestion of market inventory, it is expected that the price center will shift upwards in mid to late April, with a pressure of 5800 yuan/ton being considered above. In the long run, external factors such as interest rate cuts, commodity environment, and exports should be considered.

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