Influence of Trade Spat on PVC Industry Chain

Since 2018, the trade spat between China and the U.S. has been escalating, and more products have been involved in tariffs increase lists. It has exerted a large impact on the Sino-U.S. trade and influenced the PVC industrial chain slightly.

First of all, China and the U.S. enhanced the tariffs on imported products imported from each other. The Sino-U.S. trade spat has been upgraded from June 2018. On June 16, China and the U.S. announced a tariff increase policy for products valued 34 billion USD, which came into effect on July 6. Besides, a tariff increase policy for products valued 16 billion USD came into effect on August 23, escalating the trade friction. The spat worsened on September 24, as the U.S. added 10% tariffs on involved products from China, and the tariffs began to increase to 25% from January 1, 2019. After the constant negotiations, the Sino-U.S. trade friction has entered a 90-day running-in period from December 1, 2019, during which the tariffs will keep unchanged. The tariffs will be determined according to the negotiations after March 1.

During these rounds of trade frictions, some products in the PVC industry chain were involved. As seen from the table 2, no related PVC product was involved in the first round trade friction. In the second round, EDC, the feedstock of ethylene-based PVC, was involved. China imposed 25% tariffs on EDC imported from the U.S., which would impact the EDC import a lot. It was mainly because that China’s imported EDC from the U.S. took up 69% of the total in 2017. According to General Administration of Customs, P.R. China (GACC), the EDC import volume in November and December 2017 decreased by 57% and 45% M-O-M separately. Besides, Vinyl Chloride Monomer (VCM), PP powder and PVC floor were not involved.

Generally speaking, the Sino-U.S. trade friction only exerted a limited impact on the PVC industry chain. The export of PVC floor is supposed to be influenced obviously in the future, which is mainly determined by the negotiation between China and the U.S. on March 1, 2019.