SAO PAULO (ICIS)–Polyvinyl chloride (PVC) prices could stabilize at around $800/tonne over the longer term if crude oil remains in the $70-90/barrel range, as the structural supply shock caused by the Iran war is to favor producers with US Gulf Coast cost bases such as Orbia, the CEO at the Mexican chemicals major said on Wednesday.
Sameer Bharadwaj said if crude oil stays over $60/barrel, PVC prices were “unlikely” to return to the earlier $600/tonne lows, although he conceded supply continues to be abundant globally.
By the end of April, PVC prices stood at around $750/tonne. Earlier on Wednesday, crude Brent prices were trading at $117.55/barrel.
“What we are now seeing is a supply shock, and that steepening of the supply curve is what has driven PVC prices higher. PVC is available in adequate quantities – the issue is not scarcity, it is cost. Prices are high because the supply curve is steep. Where they settle ultimately depends on where oil lands in the coming months,” said Bharadwaj.
“If crude stays well above $60/barrel, the low prices of $600-700/tonne are unlikely to return. If it settles in the $70-90/barrel range, you would expect PVC to stabilize around $800 per tonne over the longer term,, which is actually a healthy outcome for the industry.”
“It is also worth keeping in mind that the operating rate differential between the bottom and top of the PVC cycle is not that wide: the trough is around 76% and the peak around 82-83%,” he added, speaking to reporters and chemical equity analysts after Orbia published earlier this week its first-quarter financial results.
The producer increased sales and earnings during Q1, year on year, and narrowed its net loss while reaffirming its earnings guidance for 2026 – see bottom table for full financials.
WAR SHOCK A POSITIVE
Even if PVC remains oversupplied – and continues to be one of China’s top export petrochemicals products due to low demand in the country – the war in the Middle East has completely changed the scenario for Orbia, for whom PVC is the main product in its portfolio.
The company reported a sharp improvement in its polymer solutions division, driven by severe disruption to competing Asian PVC producers, particularly Chinese ethylene-based manufacturers and producers in Japan, South Korea, and Taiwan, whose supply of key feedstock naphtha has severely been disrupted by the conflict.
“The impact on oil supply, and consequently naphtha supply from the Middle East, is quite severe, with respect to the Asian producers of PVC,” said Bharadwaj.
“This has resulted in them operating at lower rates. Net-net, what we see is that the slope of the supply curve has increased sharply, leading to a significant increase in PVC prices, and we will be significant beneficiaries of that in the second quarter.”
The CEO noted that Orbia’s structural cost advantage – with its production base largely anchored on ethane feedstock from the US Gulf Coast – had not changed materially during the conflict period, leaving the company insulated from the supply disruptions battering Asian competitors.
Even if the war were to end in the near term, he said, the damage to supply chain logistics would take time to normalize.
“Most experts say that even if the war were to end soon, the supply chain logistics disruptions that have been caused would take a minimum three to six months to unwind,” he added.
Post time: Apr-30-2026