China's PVC capacity totaled 20.4 million metric tons in 2010. Actual output exceeded 11 million metric tons in 2010, and is expected to rise almost 10 percent annually to more than 16 million metric tons in 2015, according to various industry reports.
While exports could theoretically be a solution to overcapacity, Chinese PVC producers -- many using coal as a feedstock -- are losing price advantages due to a number of factors including the strengthening currency. They also face rising coal prices as China becomes a net importer of coal. Low-price ethylene imported from the Middle East poses further challenges to coal-based PVC.
Since 70 percent of China's PVC output is used in construction, the future of the real estate market in China brings some uncertainty. However, Beijing's aggressive plans to add government-subsidized residential housing and remodeling of old building are expected to boost demand.
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