A two-year forecast for PVC price

During the 2021-2022 price cycle, the demand for thermoplastics experienced a significant growth. In that phase, concerns about production stops, due to bottlenecks in global value chains in the aftermath of the Covid-19 pandemic, led user companies to prioritize material availability over price convenience, as illustrated in a previous analysis regarding the role of distributors.
In addition to the demand factor, an increase in feedstock costs also contributed to rising prices. Thermoplastics, infact, result from complex production chains, with petroleum and natural gas as feedstocks, and sometimes other inputs, including chlorine, whose production process is particularly energy-intensive.
One of the products that experienced significant price increases during the 2021-2022 biennium was Polyvinyl chloride (PVC)^[1]. The raw materials involved in PVC production are ethylene, directly derived from the refining process of natural gas and petroleum, and chlorine.

Forecasting scenario of the main cost determinants

To assess the trend in PVC prices over the next 24 months, a dynamic specification model has been estimated, based on production costs and the global industrial cycle index^[2], in order to capture the effects of any imbalances between commodity demand and supply.
The price forecast scenario for ethylene and chlorine, expressed in euros per ton, is shown below.

PVC cost determinants forecasting scenario

Ethylene

Chlorine

In the case of ethylene, the growth dynamics in the 2021-2022 biennium brought prices slightly above historical averages. In 2023, there was a reduction, with an annual decrease of -15%, bringing the price within the long-term range. In the next biennium, prices are expected to show a slight increase, coinciding with the global commodity demand recovery.

As for chlorine, an unusually strong growth dynamic was recorded, with prices reaching around 364 euros per ton in 2023, more than doubling the 2000-2020 average. Additionally, the peculiarity of chlorine prices lies in the fact that the maximum level was recorded in 2023, not in 2022 as in the case of ethylene. In the 2024-2025 biennium, chlorine prices are expected to remain at elevated levels, in line with increased costs from its production process.

PVC Price Forecast

The graph of the two-year forecast for PVC prices, expressed in euros per ton^[3], is reported in the graph below.

PVC Price Forecast, in €/Ton

Similar to chlorine prices, PVC prices were affected by a sharp increase in the 2021-2022 biennium, reaching a historic high of over 1500 euros per ton in 2022. Unlike chlorine, however, there was a reversal in trend in 2023, bringing prices to about -33% lower than the previous year's highs.
In 2024, PVC prices continue the declining trend, with an annual variation of -3.5% compared to 2023. Supported by ethylene and chlorine prices, as well as an industrial cycle in recovery, prices in 2025 return to growth, reaching slightly above 1000 euros per ton.

1. For more information on PVC, see the relevant product page.
2. Refer to the latest update of the scenario described in the article The fall in commodity prices will slow down in 2024.
3. The estimated model is the Engle and Granger model, considering, in addition to the variables mentioned above, the Harmonized Index of Consumer Price Euro Area (to capture all residual costs not associated with materials) and a dummy variable with a value of 1 in the period 2021-01/2022-11 (to estimate the effect of increased distribution margins along the supply chain in the same period). All variables have undergone logarithmic transformation. The estimation results are reported below:

Long-term equation estimate results

Short-term equation estimate results