Can PVC become the next electrolytic aluminum?

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The PVC industry is standing at the tipping point of a revaluation.

On February 8, Ni Ji and Wan Liyang, analysts at Orient Securities Research Institute, released a deep-dive report. Since the end of 2025, PVC concept stocks have collectively rallied, attracting market attention. However, commodity price gains have been limited, and the general market view is that this is due to a rush for exports prior to the cancellation of the export tax rebate in April.

Using electrolytic aluminum as a comparison, the report makes a bold judgment: the factors suppressing PVC industry prosperity have fundamentally shifted, and the asset value revaluation window is opening.

Divergent Economics of Energy Consumption

The report points out that PVC and electrolytic aluminum are both high energy-consumption products, with electricity forming the core of their cost structure. Before 2022, the output value per kilowatt for both was basically the same, but afterwards they sharply diverged. By early 2026, the output value per kilowatt of electrolytic aluminum had exceeded that of calcium carbide PVC by more than double.

"The main reason for the marked divergence between electrolytic aluminum and PVC since 2022 is changes in demand. PVC demand declined; in contrast, electrolytic aluminum demand grew rapidly driven by the photovoltaic sector."

Analyst calculations show that by 2025, aluminum used in photovoltaics will account for 12% of total domestic demand, while PVC demand will decrease and rely on exports to absorb capacity.

The key turning point: the proportion of PVC exports has reached 18%, which the report considers "a very important turning point." In the first three quarters of 2025, emerging markets such as India, Vietnam, and Uzbekistan contributed the main increase in exports, with GDP growth in these countries generally above 5%. The report concludes that as long as countries along the "Belt and Road" maintain growth momentum, the PVC demand structure may replicate the transformation path seen for electrolytic aluminum after 2022.

Invisible Red Lines on the Supply Side

The report's more aggressive view lies in supply constraints. While PVC does not have an "aluminum-style" capacity ceiling of 45 million tons, dual-carbon policies have effectively imposed stricter limitations. The output value per unit carbon emission for calcium carbide PVC is only 914 yuan/ton CO2, far below the national average, and process emissions can scarcely be reduced by green hydrogen or green electricity technologies.

"Within the dual-carbon goal framework, calcium carbide PVC can be said to be one of the products with the least industrial appeal."

Internationally, China's power generation capability leads the world by far, making it exceptionally difficult to replicate elsewhere. Even for electrolytic aluminum—where investment returns have significantly improved—capacity relocation to places like Indonesia is still progressing slowly.

The report uses Tianshan Aluminum and Beiyuan Group as samples and estimates that in 2024, the net profit per kilowatt-hour for electrolytic aluminum will reach 0.21 yuan, while PVC will barely be profitable. If PVC recovers to a comparable level, then dual-ton profit (1 ton PVC + 0.7 ton caustic soda) will exceed 1,500 yuan.

Risk Disclosure and DisclaimerThe market is risky, and investments must be made with caution. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Investment is at your own risk. ```