Asian PVC production capacity in 2009 will account for nearly half of the global operating rate will be far below the global average

The U.S. publication *Chemical Weekly* recently highlighted that Asia is set to take the lead in the global PVC market's rapid expansion in the coming years. According to the latest data, global PVC production capacity reached 32.86 million tons per year in 2005, with the Asia-Pacific region accounting for 16.27 million tons annually. North America and Western Europe followed with 8.543 million tons and 6.408 million tons respectively. The consulting firm Chemical Markets Alliance (CMAI) forecasts that global PVC demand will grow at an average annual rate of 4% through 2009, with most new capacity concentrated in Asia, particularly in China. By 2009, Asia’s share of global PVC production is expected to rise from 44% to 48%. China has been a major driver of this growth, with new PVC capacity reaching over 2 million tons per year in 2005—nearly 40% of the world’s total new capacity. Most of these new facilities use the calcium carbide process, which produces a type of PVC not easily exported to international markets. As a result, Chinese PVC plants are expected to operate well below the global average, which is projected to remain around 85% before 2009. In contrast, North America faces a different scenario. With limited new PVC capacity being added, operating rates in the region are expected to stay above the global average. However, supply constraints have already emerged due to disruptions caused by recent hurricanes, leading to a tight supply situation in the fourth quarter of 2005. Analysts note that OxyVinyls’ 150,000-ton-per-year plant in Edmonton, Canada, may shut down next year, further tightening the market in 2006. On a positive note, Shintech is planning to build a 590,000-ton-per-year PVC facility in Louisiana, which could help ease supply pressures in the long run. The North American PVC market saw strong growth of 6% in 2004 but experienced a 3% decline in the first three quarters of 2005. Analysts believe that if the residential and construction sectors continue to recover, PVC demand in the region could rebound by 3% to 5% in 2006. Overall, while Asia leads the way in expansion, North America remains a key player with its own challenges and opportunities ahead.

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