Domestic PVC prices have been sluggish since falling from September. Until November, domestic PVC prices have not improved, and the price is still low. At present, the price of calcium carbide method in East China and South China is 6300 to 6400 yuan (ton price, the same below), and the ethylene price is 6500 to 6800 yuan. The transaction volume is light, and the price is still falling.
Analysis of the domestic PVC market has been sluggish, the main factors of price decline in five areas:
The first is a sharp increase in output. According to statistics, from January to October, the domestic output of polyvinyl chloride was more than 5.3 million tons. In October, the monthly output was more than 600,000 tons. This year, domestic PVC production exceeding 6.5 million tons is a foregone conclusion. According to the latest statistics from China Chlor-Alkali Industry Association in November, domestic PVC production capacity will reach 9.72 million tons this year, and will exceed 13 million tons next year, surpassing the United States to become the largest PVC production country. Although maintenance of domestic companies was relatively concentrated in October, the resulting reduction in output was minimal relative to total output, and had little impact on the domestic market. It did not fundamentally alleviate the problem of excess domestic production. The sharp increase in output brought about the domestic PVC market. The negative impact will be further manifested in the future.
Second, the downstream demand gradually shrinks. With the further decline of winter temperatures, the operating rate of downstream enterprises in the northeast, northwest, and north China regions has been gradually reduced, and the demand for PVC has further shrunk. It is almost approaching zero demand. As a result, the supply of goods from the north is almost entirely south, relying on the consumption of the southern market, causing a great impact on the southern market, and increasing sales pressure. With the gradual appearance of the country’s macroeconomic regulation and control, especially the real estate-related industries have a greater impact. As copper prices have skyrocketed, the wire and cable industry has been greatly affected and demand for PVC has also been reduced. In this year's macroeconomic operating environment, the petrochemical industry is generally not booming. The upstream production has increased, the downstream demand has continued to shrink, and the market supply has been seriously unbalanced. Therefore, the sales pressure is reflected in the decline in market prices, and prices have further declined.
The third is the decline in raw material calcium carbide prices. The domestic supply of calcium carbide is also basically in a state of oversupply. The decline in the price of calcium carbide raw materials has led to a drop in the price of calcium carbide, while downstream PVC companies have shown negative effects on the relative surplus of calcium carbide inventory, which has accelerated the decline in the price of calcium carbide, and the lowest calcium carbide price in the northwest is close to 1,800 yuan. In August, due to the national environmental protection inspections and the increase in the price of electricity in the Northwest, the price of calcium carbide climbed upwards. At the same time, due to the suspension of production of small enterprises, supply became tense. However, with the end of environmental protection inspections and rising prices, the operating rate of calcium carbide companies has increased, supply has begun to ease, and prices have fallen again, and there is still a downward trend. VCM’s foreign offer is around US$650, but it is far from the psychological price of 600 US dollars accepted by domestic companies. Therefore, the transaction is difficult. In the case of the decline in the market with calcium carbide PVC as the guide, the ethylene PVC did not support the domestic market, so the price was also forced to decline.
The fourth is the influence of the economic cycle of the chemical industry. The cyclical changes that are more prevalent in the economic field are also applicable to the chemical industry. At the end of October, the China Chemical Industry Business Cycle Summit, organized by the China Chemical Industry News, was held in Beijing. Experts at the meeting conducted a more detailed analysis of the business cycle of the petrochemical industry. The chlor-alkali industry is no exception and is also affected by cyclical development. The industry generally believes that the development cycle of the PVC industry in 4 to 5 years, the basic development of the peak last year, this year is going downhill.
Fifth, the factors of poor logistics. The bottleneck of transportation has always been the main factor that restricts the development of the northwestern production enterprises. It was difficult to transport railroads to the south sometime ago, which hindered the transport of PVC. And with the continued increase in PVC production in the future, logistics will play a more important role in the transport of PVC. Demand determines the market, and downstream demand cannot keep pace with upstream development. It must also be the time when the market is down. Now the PVC market has begun to enter the stage of reshuffling and industrial adjustment. Market prices will remain low for a period of time.
Analysis of the domestic PVC market has been sluggish, the main factors of price decline in five areas:
The first is a sharp increase in output. According to statistics, from January to October, the domestic output of polyvinyl chloride was more than 5.3 million tons. In October, the monthly output was more than 600,000 tons. This year, domestic PVC production exceeding 6.5 million tons is a foregone conclusion. According to the latest statistics from China Chlor-Alkali Industry Association in November, domestic PVC production capacity will reach 9.72 million tons this year, and will exceed 13 million tons next year, surpassing the United States to become the largest PVC production country. Although maintenance of domestic companies was relatively concentrated in October, the resulting reduction in output was minimal relative to total output, and had little impact on the domestic market. It did not fundamentally alleviate the problem of excess domestic production. The sharp increase in output brought about the domestic PVC market. The negative impact will be further manifested in the future.
Second, the downstream demand gradually shrinks. With the further decline of winter temperatures, the operating rate of downstream enterprises in the northeast, northwest, and north China regions has been gradually reduced, and the demand for PVC has further shrunk. It is almost approaching zero demand. As a result, the supply of goods from the north is almost entirely south, relying on the consumption of the southern market, causing a great impact on the southern market, and increasing sales pressure. With the gradual appearance of the country’s macroeconomic regulation and control, especially the real estate-related industries have a greater impact. As copper prices have skyrocketed, the wire and cable industry has been greatly affected and demand for PVC has also been reduced. In this year's macroeconomic operating environment, the petrochemical industry is generally not booming. The upstream production has increased, the downstream demand has continued to shrink, and the market supply has been seriously unbalanced. Therefore, the sales pressure is reflected in the decline in market prices, and prices have further declined.
The third is the decline in raw material calcium carbide prices. The domestic supply of calcium carbide is also basically in a state of oversupply. The decline in the price of calcium carbide raw materials has led to a drop in the price of calcium carbide, while downstream PVC companies have shown negative effects on the relative surplus of calcium carbide inventory, which has accelerated the decline in the price of calcium carbide, and the lowest calcium carbide price in the northwest is close to 1,800 yuan. In August, due to the national environmental protection inspections and the increase in the price of electricity in the Northwest, the price of calcium carbide climbed upwards. At the same time, due to the suspension of production of small enterprises, supply became tense. However, with the end of environmental protection inspections and rising prices, the operating rate of calcium carbide companies has increased, supply has begun to ease, and prices have fallen again, and there is still a downward trend. VCM’s foreign offer is around US$650, but it is far from the psychological price of 600 US dollars accepted by domestic companies. Therefore, the transaction is difficult. In the case of the decline in the market with calcium carbide PVC as the guide, the ethylene PVC did not support the domestic market, so the price was also forced to decline.
The fourth is the influence of the economic cycle of the chemical industry. The cyclical changes that are more prevalent in the economic field are also applicable to the chemical industry. At the end of October, the China Chemical Industry Business Cycle Summit, organized by the China Chemical Industry News, was held in Beijing. Experts at the meeting conducted a more detailed analysis of the business cycle of the petrochemical industry. The chlor-alkali industry is no exception and is also affected by cyclical development. The industry generally believes that the development cycle of the PVC industry in 4 to 5 years, the basic development of the peak last year, this year is going downhill.
Fifth, the factors of poor logistics. The bottleneck of transportation has always been the main factor that restricts the development of the northwestern production enterprises. It was difficult to transport railroads to the south sometime ago, which hindered the transport of PVC. And with the continued increase in PVC production in the future, logistics will play a more important role in the transport of PVC. Demand determines the market, and downstream demand cannot keep pace with upstream development. It must also be the time when the market is down. Now the PVC market has begun to enter the stage of reshuffling and industrial adjustment. Market prices will remain low for a period of time.
Taigong Roll Forming Machinery Co., Ltd. , http://www.hbformingmachine.com