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PVC production profitability

The article was published in Global Business Magazine, April 2011


Authors: Elena Lazko, Evgeniy Adishchev and Marat Khamitov

In 2010, Deloitte conducted a comparative analysis of production cost and contribution margin of ethylene-based polyvinyl chloride (PVC) production facilities of Europe and South-East Asia. The results of the analysis are quite straightforward and reflect overall state of the world economy at the period under review.

The European PVC production contribution margin varies from €56.7 to €247.9 per ton of PVC (not including PVC production at Ramnicu Valcea facility with its negative contribution margin) and averages at €136.45 per ton of PVC, subject to the current average capacity utilisation level of 67%. The potentially achievable contribution margin, considering existing technologies and prevailing prices, averages to €190.85 per ton of PVC. 

PVC production contribution margin in South-East Asia is negative (€65.10 per ton of PVC). It is caused by the low capacity utilisation (52% in 2009, including 44% in China). Subject to the full capacity utilisation under prevailing prices, the PVC production contribution margin is estimated at €81.47 per ton of PVC. 

This article contains results of our research, but should not be considered as a recommendation. Before making any decision or taking any action that may affect your finances or your business, you should conduct further analysis.

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