Introduction: In the first half of 2026, the domestic polyvinyl alcohol (PVA) market experienced a rise in the first quarter followed by a decline in the second quarter. Price movements were primarily driven by three key factors: upstream raw material costs, industry supply-demand dynamics, and downstream end-user demand.

1. Prices Rose Then Fell, with the Center of Gravity Continuously Shifting Downward

In the first quarter of 2026, supported by a surge in raw material prices and phased restocking, domestic PVA prices hit their peak for the year in March. Throughout March, the domestic PVA market saw a unilateral and strong upward trend. Prices rose steadily from the beginning of the month and accelerated in the middle to late periods. Taking the 1799 grade as an example, spot market offers in mid-to-late March surged to 15,200–16,700 yuan/ton, a 52.6% increase from the beginning of the year (9,500–11,400 yuan/ton). Driven by a buying-on-uptrend mentality, downstream sectors such as textiles and adhesives rushed to secure supplies for spring restocking. However, high-priced transactions gradually tapered off towards the end of the month, as resistance to elevated prices emerged.

Entering April, the domestic PVA market saw firm high prices in early April but a loosening of negotiation ranges in the latter half. Early in the month, support came from persistently high prices of upstream acetic acid and vinyl acetate, along with active price increases by overseas producers, which sustained a firm price stance supported by stable export orders. However, from mid-to-late April onward, upstream vinyl acetate prices entered a downward channel as geopolitical tensions eased and demand for high-priced imports plummeted. Cost support quickly weakened. Coupled with traditional downstream sectors like textiles, construction, and adhesives being suppressed by high prices, buyers became cautious, primarily purchasing on a need-to basis. Traders who had built up high-priced inventory earlier began to offer discounts to sell, causing high-end prices to loosen and decline. Nevertheless, producers maintained a strong price-support mentality, keeping their official offers firmly high.

In May, the domestic PVA market continued the price weakening trend from April, showing a pattern of slow, stealthy declines early in the month, accelerating declines in the middle and late periods, and facing pressure at lower levels by month-end. However, producers held their ex-factory prices stable, keeping the monthly average price still high. On the cost side, upstream vinyl acetate prices continued to plummet throughout the month, leading to a substantial collapse in cost support for PVA production. On the supply side, operating rates at major plants remained high, resulting in ample domestic spot supply. Some traders aggressively discounted their high-cost inventory, pushing the price center of gravity towards mid-to-low range. On the demand side, the traditional weak season for construction and textile sizing became evident, with muted end-user demand. Downstream factories adhered to a just-in-time purchasing strategy, avoiding inventory risks. Some segments showed relatively strong resilience supported by import substitution demand, widening the price spread between grades. On the export front, overseas buyers resisted the earlier high domestic prices, leading to a sequential decline in export orders, which further weighed on domestic spot prices. This pessimistic sentiment carried into June, prompting domestic PVA producers to significantly lower their ex-factory offers. Taking the 1799 grade as an example, prices ranged from 12,500 to 13,500 yuan/ton, a month-on-month decrease of 17.98%.

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2. Collapse of Cost Support; Obvious Supply Pressure

Vinyl acetate is the core raw material for PVA production. After experiencing a surge, its prices entered a downward channel from mid-to-late April. Deep declines in raw material costs, expectations of new production capacity coming online, and insufficient demand combined to rapidly reverse the price trend for vinyl acetate.

On the supply side, there were fewer planned maintenance shutdowns for PVA in the first half of the year. Some units operated at reduced loads temporarily in the first quarter. As overseas units reduced operating rates due to higher crude oil and raw material costs, export sources tightened. Domestic factories maintained low spot inventories. Coupled with favorable export orders diverting some domestic supply, major domestic plants steadily increased their operating rates to full capacity. Spot supply entered the market quickly, filling the supply gap caused by earlier maintenance. Market liquidity shifted from tight to loose.

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3. Weak Downstream Demand; Limited Support from Exports

PVA downstream sectors can be broadly divided into traditional necessary demand and emerging high-end demand. The persistent weakness in traditional sectors was the core drag on prices, while demand from emerging materials only supported niche high-end grades and could not lift prices across the entire product range.

Demand from traditional applications (textile sizing, construction adhesives, papermaking, etc.) was weak. Downstream factories purchased only in small quantities based on immediate needs, lacking willingness for bulk stockpiling. Construction putty and interior wall adhesives were affected by weak housing starts. Adhesive companies pressured raw material procurement prices, maintaining a just-in-time purchasing rhythm. In the paper industry, only specialty paper demand was stable, while consumption of general papermaking auxiliaries declined slightly year-on-year. Overall, necessary demand from the three major traditional downstream sectors remained sluggish, leading to continuous contraction in demand for general-grade PVA.

Looking at emerging high-end downstream demand, areas such as water-soluble biodegradable films, PVB resin, electronic glass fiber sizing, and electronic auxiliary materials for MLCC showed growth. Demand for specialty grades used in photovoltaic supporting materials and pharmaceutical excipients increased steadily, ensuring smooth sales for high-viscosity and electronic-grade products. This became the sole price support point in the market. However, the consumption volume in this sector is relatively small and insufficient to offset the decline caused by weakening demand for general grades.

Regarding exports, the first half of the year saw full order books for domestic PVA exports. In the first quarter, overseas necessary demand was released intensively, with strong restocking enthusiasm from downstream sectors in Europe, America, and Southeast Asia. Major domestic producers had ample export order backlogs. However, constrained by limited effective output from domestic units, export volumes could not expand significantly. The stable high transaction prices in the export market effectively supported domestic market prices. Entering the second quarter, overseas end-users faced cost pressures, and their resistance to high import prices grew. International prices gradually fell, and the earlier positive effect of export demand diverting domestic supply weakened. Consequently, support from exports for domestic PVA prices failed to improve significantly.

4. Outlook: Low-Level Consolidation; Limited Fluctuation Range

In the short term, vinyl acetate prices are stabilizing at low levels, making it unlikely for raw material prices to drop significantly further. This forms a bottom support on the cost side. After the price reductions in PVA, most producers have largely cleared their low-cost inventory, and trader inventory levels have declined. The willingness to continue heavy discounting has diminished. Traditional downstream sectors are currently in a phase with no concentrated restocking events, so demand remains sporadic for immediate needs. General-grade PVA prices are expected to fluctuate narrowly within a range. The period of sharp declines is over, but without positive support factors, a significant rebound is unlikely. High-end specialty PVA grades, supported by steady necessary demand, are expected to maintain stable pricing, with price fluctuations smaller than those for general grades.

Entering the third quarter, the traditional downstream restocking window arrives. Autumn and winter orders in the textile sector will gradually be placed. The peak season for building decoration will drive a recovery in adhesive demand. Additionally, the accelerating import substitution for water-soluble films and electronic materials will support steady volume growth for high-end PVA. The price center of gravity may shift from the low end towards the high end. However, constrained by the overall overcapacity in the industry, a repeat of the first quarter's surge is unlikely for the whole year. Market conditions are expected to be characterized mainly by range-bound fluctuations.

Overall, rising costs and a temporary mismatch between supply and demand drove the price increase in the first quarter. In the second quarter, falling raw material costs, increased supply, and weakening domestic demand all contributed to the price decline. Looking ahead, the backdrop of industry overcapacity is unlikely to change. There is little room for a sustained significant rise in general-grade PVA prices. High-end functional products, supported by incremental demand, still have room for long-term price stability. The structural differentiation pattern of the market is expected to persist.