The impact of a US-Iran war on PVC is primarily indirect, as China currently imports very little PVC and exports mainly to Southeast Asia and India. Therefore, the direct impact on PVC imports and exports is limited, with the main consideration being its effect on crude oil prices, which in turn influences PVC.
Historically, the lowest PVC/crude oil ratio has been around 55, compared to the current level of 70. However, given that the current supply and demand for PVC are at their worst on record, it is reasonable to believe that this ratio could approach or even hit a historic low. Based on a ratio of 55, crude oil prices of $80–$120 per barrel would correspond to PVC prices of RMB 4,400–6,600 per ton. If calculated using a ratio of 50, crude oil prices of $80–$120 per barrel would translate into PVC prices of RMB 4,000–6,000 per ton.
In summary, the impact of a US-Iran war on PVC is mainly channeled through its effect on crude oil prices. Based on the lowest historical ratio, crude oil prices below $100 per barrel are unlikely to push PVC beyond its current price range. However, if crude oil prices rise above $100 per barrel, PVC could be forced to break out of its current consolidation range.
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