polyvinylchloride (pvc) - vinnolit.com · sions in pvc capacity are be-ing planned for after 2014....

In 2012, worldwide pro-duction capacity for PVCwas 54 million t (source:

IHS),an increase of 9 million tsince 2009. Most of this ca-pacity increase again occurredin China, which now hasabout 44 % of the world's ca-pacity. Its current capacity of24 million t far exceeds theChinese domestic demand of14 million t. Because of the in-creasing costs for energy andraw materials in recent years,the coal-based carbide routefor producing the PVC pre-cursor VCM that dominatedin China has become lesscompetitive. The greater envi-

ronmental impact associatedwith this technology is anoth-er aspect. In this regard, thiscloud appears to have a silverlining in China: the CTO(Coal to Olefins) processwhich, according to Chinesemedia, is about to achieve anindustrial-scale breakthrough– this is the hope – could ad-dress this environmentalproblem while at the sametime reducing manufacturingcosts. In a best case scenariofor China, manufacturingcosts would then lie belowthose for the naphtha/ethyl-ene route used widely in Eu-rope. It can be assumed, how-ever, that a CTO process willnot undercut the low costs as-sociated with the shale gas-based production in NorthAmerica (see below).

In North America, whichhas 15 % of worldwide PVCcapacity, plant utilization hasalmost reached the pre-crisislevel again. The reason for thiscan be found less in improvedregional demand for PVC, butinstead in the increased exportvolume, since in 2012 morethan one-third of NorthAmerican production was ex-ported. In 2007/2008, exportsaccounted for less than 10 %.The primary reason for thisdevelopment can be found inthe cost benefits along the val-ue-added production chainfor PVC that resulted from theshale gas boom. Exploitationof this resource is already lead-ing to talk of a re-industrial-ization of the USA and ex-pansion of the domesticpetrochemical industry. As a

consequence, some expan-sions in PVC capacity are be-ing planned for after 2014.

“One man's sorrow is an-other man's joy” - could de-scribe the current and expect-ed realignment of the world'sPVC producers. The exploita-tion of shale gas reserves in theUSA means not only consid-erably lower-cost ethylenefrom cracking of ethane, butalso considerable cost benefitsfrom gas-based electricitygeneration,which in turn low-ers the production costs forchlorine as a PVC precursorby means of chlor-alkali elec-trolysis. Significant cost bene-fits for manufacturing PVC inNorth America are the result– creating a serious competi-tive disadvantage and chal-lenge especially for European

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Back to Square One. Growth in the worldwide PVC market has occurred primarily

in China. In contrast, European demand in 2012 was below that in the crisis year

2009. PVC specialties have shown better growth than commodities. Only moderate

global growth is expected in the coming years. Consolidation of the European PVC

industry continues.

Polyvinylchloride (PVC)

SPEC I A L K 20 13

© Carl Hanser Verlag, Munich Kunststoffe international 10/2013

PVC coatings in a car interior: frominstrument panel, door and side

trim to seat coverings and visors(figure: Benecke-Kaliko)

Translated from Kunststoffe 10/2013,pp. 40–46. Article as PDF-File atwww.kunststoffe-international.com; Document Number: PE111518 >

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Internet-PDF-Datei. Diese PDF Datei enthält das Recht zur unbeschränkten Intranet- und Internetnutzung, sowie zur Verbreitung über elektronische Verteiler. Eine Verbreitung in gedruckter Form ist mit dieser PDF-Datei nicht gestattet.

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manufacturers, who also ac-count for about 15 % ofworldwide PVC capacity.

Figure 1 shows the produc-tion capacities of the world'slargest producers (as of June2013). Several changes alsooccurred here in recent years:Following acquisition of thePVC line of Limburgse VinylMaatschappijin (LVM),Tessenderlo, Netherlands, byIneos ChlorVinyls Ltd., Rolle,Switzerland, in 2011, IneosGroup Holdings PLC, Rolle,and OxyVinyls Corp., Dallas,TX/USA, exchanged positionsin the ranking of the largestproducers.After merging withthe commodity chemicalsbusiness of PPG industries,Pittsburgh,USA,Georgia GulfCorp., Atlanta, GA/USA, hasbeen operating since 2013 un-der the new name AxiallCorp.,Atlanta, GA/USA.After

being sold to the KleschGroup, Geneva, Switzerland,the PVC business of ArkemaSA, Colombes, has been op-erating under the name KemOne, Lyon, France, since 2013.The large Chinese competi-tors have climbed in the glob-al ranking. The picture is dif-ferent, on the other hand, forPVC specialties intended forpaste processing – here, theEuropeans as represented byVinnolit GmbH & Co. KG, Is-maning, Germany, Solvin/Solvay Plastics, Brussels, Bel-gium, and Vestolit GmbH &Co. KG, Marl, Germany, holdthe top three places in theworld.

Consolidation in the indus-try continues: Ineos Chlor-Vinyls and Solvay, previouslyin sixth place and third place,respectively, in the worldwideranking, have – pending ap-

proval by government agen-cies – announced the mergerof major portions of their PVCbusiness for the end of 2013.Such a merger would abrupt-ly catapult the new companyto 2nd place behind Shin-EtsuChemical, Tokyo, Japan, andahead of Formosa PlasticsGroup, Taipei, Taiwan.

Consumption and Export

With 37.4 million t in 2012,PVC is in third place behindpolyolefins in terms of globalplastics consumption.Averageannual market growth(CAGR) of 4.9 % in the peri-od from 2009 to 2012 occurredlargely in China, the largest

single market (with 14 mil-lion t), which grew by 3.7 mil-lion t from 2009 to 2012. Atsame time, China still importsover 1 million t of PVC peryear; the projected transitionto a net exporter has not yettaken place. A breakdown byregion is given in Figure 2.

After the record year of2007, and following the worstof the financial and econom-ic crisis in 2009, the EuropeanPVC market has not yet re-bounded to the pre-crisis lev-el yet. The drop in demand in2009 versus 2007, especially inthe European Economic Area(EEA = EU + Iceland, Liecht-enstein and Norway) was aninconceivable 24 %. After aninitial recovery of about 5 %in 2010, the PVC market inthis region exhibited a de-crease of 4 % per year on av-erage. Demand in the EEA in2012 was even lower than inthe crisis year of 2009.

Worldwide demand forPVC is determined largely byconstruction activity. Themost important applicationsglobally are pipes and fittings(42 %), profiles and hose/tub-ing (18 %), rigid film and

Production capacities

Shin-Etsu Chemical/JPFormosa Plastics/TW

Solvay/BELG Chem/KP

ChemChina/CNIneos ChlorVinyls/UK

OxyVinyls/USTianjiin Bohai Chemical/CN

CNSG/CNAxiall/USSCAC/CN

Kem One/FRVinnolit/DE

Westlake/USMexichem/MX

0

3,700

3,300

2,450

2,300

2,000

1,850

1,650

1,300

1,250

1,100

1,050

900

780

770

750

1,000 2,000 3,000 kt 4,000

Fig. 1. Production capacities of the world's largest producers (as of 6/2013) (source: Vinnolit)

© Kunststoffe

North America12 %

Rest of theworld 11 %

China 38 %

Europe, incl.Turkey 19 %

Asia withoutChina 20 %

Total:37,400 kt

Fig. 2. Worldwide PVC consumption in 2012, broken down by region(overall 37,4 million t) (source: IHS/Vinnolit)

© Kunststoffe

Pipes/fittings42%

Others 13 %

Bottles 2 %

Profiles andhose/tubing 18 %

Cables 8 %

Rigid film/sheet 17 %

Fig. 3. PVC applications around the world in 2012 (source: IHS)

© Kunststoffe

Profiles,unplasticized 27 %

Others 16 %

Coatings 4 %

Pipes/fittings 21 %

Rigid film/sheet 10 %

Flexible profiles 2 %

Flooring, total 8 %

Cables 7 %Profiles,plasticized 5 %

Fig. 4. PVC applications in Europe in 2012 (source: Vinnolit)

© Kunststoffe

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17Kunststoffe international 10/2013 www.kunststoffe-international.com

sheet (17 %) as well as cable(8 %) (Fig. 3). Given that con-struction activity in the Eurozone is far below historic lev-els and has still not reachedthe pre-crisis level in the USAdespite considerable improve-ments, global PVC growth in2012 has been driven prima-rily by the still-intense con-struction activity in the BRICstates (Brazil, Russia, India,China).

Price Development and Trends

Since the beginning of 2009,capacity utilization amongmanufacturers in the EEA hasbeen around 75 %. PVC over-capacity here still exceeds1 million t. Producers are at-tempting to boost utilizationby increasing exports.

As the PVC price is deter-mined primarily by supplyand demand, and with thePVC market in the EEA char-acterized by overcapacity andlow capacity utilization since2009, it is not surprising thatthe price and profitability lev-el has dropped to a certainminimum. It should be notedthat the price level in recentyears has changed largely inresponse to cost effects asso-ciated with the most impor-

tant raw materials – above all,ethylene. On this basis, busi-ness with standard S-PVCcannot be profitable for theproducers.

A slightly better develop-ment was observed briefly forPVC specialties. The demandfor paste PVC reboundedfrom the crisis very dynami-cally in 2010 and encounteredan availability bottleneck atthe end of 2010 that support-ed a higher price level world-wide until this developmentebbed in the course of 2011,resulting in a largely balancedmarket for paste PVC sincethen.

The slow yet continuousand uninterrupted increase inthe volume of rigid PVC ap-plications that lasted until thecrisis year of 2009 did not con-tinue: because of the relativeweakness in large construc-tion applications, the volumeof flexible applications in Eu-rope has grown from just un-der 31 to 33 % since then.Nevertheless, unplasticizedprofiles,pipe/fittings and rigidfilm/sheet still remain thelargest applications. Figure 4shows PVC applications byregion in Europe (Title figure,Figs. 5 and 6).

Worldwide, almost 6 mil-lion t of plasticizers are

Fig. 5. Energy-saving PVC window profiles – the no. 1 PVC application inEurope (figure: Schüco)

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Wor ld Ma rke t SPEC I A L

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used annually, with 1 milliont of them in Europe (source:ECPI). Replacement of DEHP(di-2-ethyl-hexylphthalate)with high-molecular-weightphthalate plasticizers having 7to 13 carbon atoms in themain chain, e.g. DINP (di-isononylphthalate) and DIDP(diisodecylphthalate), hascontinued in Europe. As a re-sult, DEHP usage in 2011 ac-counted for only about 10 %,while 80 % of the plasticizerused in Europe were high-mo-lecular-wait phthalate plasti-cizers (DINP/DIDP/DPHP).The two most frequently usedhigh-molecular-weightphthalates – DINP and DIDP– underwent extensive evalu-ation by European agencies.The result: neither has beenclassified as a health or envi-ronmental hazard. They willthus be able to retain their po-sition as standard plasticizersin the future as well. With aproportion of 10 %, a numberof alternatives to the phtha-lates have gained acceptancein the market. In addition touse in sensitive applicationssuch as children's toys, foodpackaging and medical de-vices, they are also finding in-creasing use in other near-consumer applications, e.g.floor coverings. Here, all well-

known manufacturers of PVCfloor coverings are pursuingthe development of at leastindividual product lines us-ing cyclohexanoates (e.g.DINCH), terephthalates orcitrates to address consumerdemands. It can thus be ex-pected that the number of al-ternative plasticizers, whichwas relatively constant overthe last 10 years, will increasein the medium term.

The trend toward Ca-Znformulations to stabilize PVCproducts has also continued.After cadmium-containingstabilizer systems were elimi-nated in the EU15 since 2001,

in the EU25 since 2006 and inthe EU27 since 2007, con-sumption of lead stabilizershas also declined by more than76 % in the time period from2007 to 2012. Here, the Euro-pean associations of stabilizerproducers (ESPA) and PVCprocessors (EuPC) haveagreed to a voluntary com-mitment to complete elimina-tion (see below) by the end of2015.

The new sustainability pro-gram VinylPlus announced inJune 2011, which is based onthe success of the precedingprogram Vinyl 2010, is off toa successful start. The objec-tives are to increase PVC recy-cling levels, help eliminate thebuildup of persistent pollu-tants in the environment, re-duce emissions further, ensurethe use of additives on the ba-sis of accepted sustainabilitycriteria, boost energy efficien-cy and use of renewable ener-gy sources and raw materialsin PVC production and in-crease awareness of sustain-able development in the entirePVC value-added chain. Forinstance, within the frame-work of VinylPlus, a total of362,000 t of PVC were recy-cled in the year 2012. In addi-tion to PVC consumer waste,this figure includes certainprocess waste from PVC pro-cessing.The growing recyclingrate and the resulting more ef-ficient and sustainable use of

PVC as a material in the EUhave an increasingly dampingeffect on the demand for vir-gin PVC.

Despite the economic cri-sis, conversion of chlorineproduction in the EU from theamalgam to the more envi-ronmentally friendly and en-ergy efficient membraneprocess (Fig. 7) has continuedand is being pursued furtherby the European chlorine in-dustry and PVC manufactur-ers. By the beginning of 2012,the amalgam process haddropped to 32 %, even thoughsome conversion projectswere delayed and could not becompleted as planned. Thistrend – away from the amal-gam process – can be observedworldwide as well. In accor-dance with the voluntarycommitment by members ofEuro Chlor, the conversion inEurope is expected to be com-pleted by 2020.

Market Forecasts

For the next few years, we ex-pect moderate PVC growth ofbetween 3 and 4 % per yearworldwide with pronouncedregional differences. In theemerging markets, e.g. Chinaor the Indian subcontinent,growth is expected to be be-tween 5 and 8 % per year,while only slight growth is ex-pected for Western Europe.For the USA and Eastern

Fig. 7. By 2020, amal-gam technology inEurope will be re-placed with environ-mentally friendly andenergy-efficientmembrane technolo-gy for chlorine pro-duction (figure: Vinnolit)

Fig. 6. In 2012, rigid PVC film (here, pharmaceutical film) held third placein the ranking of PVC applications (figure: Bilcare)

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Europe, a relatively dynamicdevelopment with growthrates between 4 and 5 % isprojected.

The engine of growth inemerging markets remains thestill-low PVC per capita con-sumption with some catchingup to do as well as the reviv-ing construction activity,above all, in terms of infra-structure projects. A resur-gence in construction activitycan also be observed in NorthAmerica, while Western Eu-rope – with the exception ofGermany – still tends to beweak.

Consequently, the Euro-pean Economic Area will re-main unaffected initially bythe overall positive global de-velopment. For this reason, ifand whether the PVC demandlevel of 2007 will be reached inthe EEA is unsure, since it isdifficult to assess the extent towhich structural effects willinfluence the market rebound.The relocation of processingcapacities from Western toEastern Europe observed inthe past might mean thatgrowth in Western Europecould drop further and thatexport of semi-finished andfinished goods to Eastern Eu-rope would also decline fur-ther. On the other hand, highgrowth in Eastern Europecould have an opposite effect– also driven by a certain pent-up demand – and in turn re-sult in increased export ofPVC raw materials to the CIScountries. In the longer term,local production capacitiescan be expected not to keeppace with growing demand.

The relative market weak-ness as well as the high rawmaterial and energy priceshave further facilitated the ur-gently required consolidationactivities in the European PVCindustry: The former chlor-vinyl plant of Vinyls Italia Spa,Venice, Italy, has been shutdown. With the acquisition ofthe PVC business of LVM aswell as the closing of a 100 ktPVC plant in Runcorn and a135 kt chlorine plant in Wil-

helmshaven, Germany, IneosChlorVinyls has taken the firstconsolidation steps. Arkemahas sold its PVC business tothe Klesch Group; the newbusiness with the name KemOne, however, is currently inbankruptcy (August 2013).The planned joint venture be-tween Ineos ChlorVinyls (Ker-ling) and Solvay/Solvin (withthe exception of the RusVinylcapacity still under construc-tion and the subsidiaries out-side Europe) will permanent-ly change the PVC supplierpicture in Europe.

The shale gas-driven ren-aissance among North Amer-ican producers is a real “gamechanger” for the rules of thegame around the world –especially for all ethylene-dependent plastic productionfacilities. Construction of ad-ditional ethane crackers inNorth America will acceleratethe development of NorthAmerican PVC manufacturersas cost leaders and increasetheir export opportunities.

However, because of still-limited capacities and the con-centration on higher-growth

regions (South America,Asia), increased PVC exportsfrom North America to Eu-rope are not to be expected inthe near term. Thus, for thetime being, “only” the exportbusiness of European produc-ers themselves will be affectedby increased competition. Itremains to be seen what willhappen as regards shale gasdevelopments in Europe andon other continents.�

Josef Ertl, Thomas Brock, ThomasKufner, Oliver Mieden, Wolfram

Proessdorf and Edmund Vogel, allIsmaning, Germany

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