The period from 2020 to 2024 witnessed a significant evolution in the production capacity of polyvinyl chloride (PVC) paste resin in China. Over these years, the industry experienced rapid development, with many enterprises focusing primarily on enhancing their production capabilities rather than establishing new facilities. Notably, Jinxiang Materials emerged as the sole new company entering the market during this timeframe. The concentration of production among a few major players kept the industry's competitive landscape quite robust. By the end of 2024, China’s total production capacity for PVC paste resin was projected to reach an impressive 150,500 tons annually, signaling the material's rising importance in various applications. Prior to 2019, the landscape was dramatically altered by the government's efforts to phase out outdated capacities and relocate mainstream manufacturers, such as the relocation of Tianjin Bohai Chemical and the suspension of Binzhou Zhenghai Technology. This transition impacted the growth rate of PVC paste resin, leading to negative growth for the first time in history. However, with the overall improvement in the domestic chemical market, the stabilization of production capacities, and the abrupt shifts in supply and demand caused by the COVID-19 pandemic in 2020, PVC paste resin surged in popularity. Many companies that had previously halted operations resumed production, and existing companies undertook expansion projects, resulting in a remarkable increase in capacity. Between 2019 and 2022, production capacity soared by 245,000 tons, peaking at 535,000 tons by 2022. Come 2023, Jinxiang Materials in Jiyuan commenced production for a PVC paste resin line with an annual capacity of 60,000 tons in late July, adding yet another layer of production capacity to an evolving market. However, due to previously closed capacities exiting the marketplace, the overall capacity reached 495,000 tons by the end of this year. For the year 2024, however, the growth rate of PVC paste resin production capacities indicated a noticeable decline, with new projects like the Central Salt’s Inner Mongolia chemical upgrade contributing a modest increase of just 10,000 tons per year, bringing the growth rate down to a mere 1%. This slowdown in expansion was largely a byproduct of a continuous market optimization and reshuffling process. When analyzing the production capacities of PVC paste resin enterprises projected for 2024, it becomes clear that companies with capacities exceeding 100,000 tons annually accounted for 84% of the total output, reflecting an 11% increase since 2020. Recently, manufacturers focused on expanding existing projects rather than launching new initiatives, resulting in a trend toward larger-scale and more centralized production operations. Despite this growth, oversupply compared to demand led to intensified competitive pressures within the industry, with prominent players capturing an increasing share of the market while smaller or inactive enterprises faced risks of potential elimination.For instance, Binzhou Zhenghai Group's PVC paste resin facility, which resumed operations in August 2020 with a capacity of 40,000 tons, has since ceased production in April 2021 and remains inactive. Similarly, Jiangsu Corning Chemical’s plant, another significant contributor with a capacity of 100,000 tons, has not resumed production since April 2023, leaving plans for future operations unclear. Furthermore, a regional analysis of PVC paste resin capacities in 2024 highlights the significant distribution across various areas. The Northwest region accounted for 645,000 tons, making up 43% of the total; the North China region contributed 300,000 tons (20%); East China, also at 300,000 tons (20%); Northeast China, contributing 200,000 tons (13%); and Central China with 60,000 tons (4%). This distribution signifies a continued trend of enterprises moving towards the western regions, where cotton and coal, the primary raw materials for PVC paste resin production, are more abundantly available. Given China’s rich coal reserves and limited oil resources, particularly in the Northwest, it is no surprise that production capacity for PVC paste resin is heavily concentrated in this area. Examining the different production processes utilized for PVC paste resin, it is apparent that the predominant method in China is the carbide method, which primarily relies on calcium carbide, coal, and salt as raw materials. In contrast, the international market largely favors the ethylene method, which derives from petroleum. China’s unique resource circumstances, characterized by a rich supply of coal but limited oil and gas, mean that carbide production methods account for over 70% of the total PVC production capacity in the country. Over the years, a well-integrated circular economy has emerged in relation to the "calcium carbide-chlor-alkali" model, particularly in Northwest China's chlor-alkali enterprises, most of which are equipped with carbide furnaces. The advantages of integrated PVC paste resin enterprises can be categorized into two main aspects. First, there is a significant cost advantage, as these companies typically utilize advanced, large-scale closed furnaces, alongside self-sourced energy from power plants, resulting in lower relative costs due to their larger scale and efficiency.Secondly, the stability of production emerges as a key benefit, as these enterprises typically coordinate their operations strategically. This not only ensures an efficient energy flow between the carbide installations and the PVC paste resin production lines but also supports a more rational production schedule. In summary, the current landscape of PVC paste resin production is marked by a phase of expanding capacity, predominantly in the Northwest region of China.Even though the carbide production method remains paramount, the gradual establishment of additional capacities hints at the growing importance and inevitability of the ethylene method in the near future. As the industry continues to adapt and evolve, balancing supply and demand will remain crucial for sustained growth and competitiveness.
