As a PVC raw material manufacturer, IPC is familiar with the impact that oil price fluctuations can have on raw material costs.
Not only does the fuel price impact the PVC manufacturing industry the way it does any other industry, due to increased fuel and transportation costs, but it also has a direct impact on manufacturing inputs.
Let’s take a look at how this works.
Oil is a Primary Raw Material in PVC Production
PVC is manufactured using ethylene as one of the key ingredients. Ethylene is derived from the cracking of hydrocarbons such as ethane or naphtha. Ethane is commonly sourced from natural gas, while naphtha is a derivative of crude oil.
Therefore, when oil prices go up, the cost of producing ethylene also rises, which directly impacts PVC production costs.
PVC production is also dependent on chlorine, which is extracted from salt through electrolysis. Although chlorine is not derived from petroleum, the electrolysis process requires a significant amount of electricity, which, in many cases, is closely linked to oil and gas prices.
When fluctuations in oil prices occur, ethylene manufacturers might adjust their production capacity to manage their own costs, potentially leading to a shortage of supply and consequently driving up prices. This directly impacts PVC prices as well.
Increased Fuel Costs and the PVC Industry at Large
Like any other industry, PVC manufacturers rely on fuel to keep their supply chains running, from raw material extraction to final distribution. When oil prices rise, fuel prices also increase, directly affecting the cost of transporting raw materials and finished PVC products.
Diesel and petrol, primarily derived from crude oil, power the vast majority of the logistics sector. This leads to a direct impact on transportation costs, which are ultimately passed on to the end customer in the form of increased PVC prices. Shipping and road transportation are both affected, as they both depend heavily on oil for fuel.
The manufacturing of PVC also relies on oil, both directly and indirectly, for various energy-intensive production processes. When PVC production (which includes polymerisation processes requiring heat) is deprived of affordable access to energy, it can cause a rise in PVC production costs as well.
Despite volatile oil prices, IPC remains committed to delivering high-quality PVC products. If you are looking for a dependable PVC raw material manufacturer in South Africa, contact us today.
