Hormuz Crisis Hits Asian PVC Market: Major Supplier Delays Pricing, Industry Braces for Sharp Price Hikes

As shipping through the Strait of Hormuz remains blocked, supply disruptions are increasingly rippling through the downstream petrochemical chain and end consumers, with more everyday consumer goods starting to surge in price just like memory chips.

 

The latest victim is polyvinyl chloride, or PVC, used to make plastic pipes and bags. At the center of the storm is Formosa Plastics, Asia’s PVC export giant.

 

Reportedly, due to the closure of the Strait of Hormuz, Formosa Petrochemical — which supplies ethylene, a key PVC feedstock, to Formosa Plastics — has faced delays in receiving naphtha and subsequently issued a force majeure declaration, excusing its obligations to deliver ethylene, propylene and other products to customers. Sources say Formosa Plastics also issued force majeure notices to its buyers afterward. In mid-March, Lin Sheng-guan, acting president of Formosa Plastics, stated that raw material and supply issues were not severe for March, but expressed greater concern over the situation from April onward.

 

With nearly a third of April already passed, PVC industry players are still waiting for Formosa Plastics’ April shipment prices, which should have been released last month, fueling growing anxiety.

 

For reference, Formosa Plastics set its March PVC price at $720 per ton. By late March, Asian ethylene prices had reached $1,400 per ton.

 

One industry insider noted that it is highly unusual to delay pricing due to a shortage of raw materials. While pricing delays occurred during the COVID-19 pandemic, this marks the first such instance since the onset of the Strait of Hormuz crisis.

 

As a major producer of PVC resin and polyethylene, Formosa Plastics boasts an annual capacity of over 3 million tons — second only to Shin-Etsu Chemical in Asia and consistently among the top three globally.

 

Industry players also fear that even if the production-disrupted Formosa Plastics resumes pricing soon, its available shipment inventories will be extremely limited. With raw material costs soaring, price increases “could be far steeper than usual.”

 

For PVC processors, alternatives have become scarce with Formosa Plastics’ production offline. Producers still shipping products are also struggling with unstable feedstock supplies and surging costs, leaving uncertainty over whether they can expand exports. As a result, PVC manufacturers using the calcium carbide-based process (fed by coal and limestone) are drawing more attention compared to those producing PVC via the ethylene-based method.

 

Meanwhile, robust demand from India, the world’s largest PVC importer, is further complicating the supply shortage equation.

 

In India’s 2026 fiscal budget, public investment saw a record increase, particularly for infrastructure projects. Since public infrastructure naturally requires materials such as water pipes, the country’s demand for PVC is expected to keep rising.

 

In early April, the Indian government announced it would exempt imports of PVC, ammonium nitrate, methanol, styrene, acetic acid and other products from import duties starting April 2, citing disruptions to global supply chains caused by the Middle East conflict. Import duties on PVC were cut from 7.5% to 0% for a temporary three-month period ending June 30.