PVC rebound comes to an end

In the early period, due to the bottom-out rebound of crude oil prices and the voluntary reduction of load by PVC companies, PVC futures prices rebounded slightly. However, as international crude oil prices returned to weakness, PVC rebounded or came to an end.


Demand continues to decline


Public health events have a negative impact on global PVC demand. First, overseas public health incidents have still not been effectively controlled. Most countries, including India, China ’s largest PVC export destination, still adopt strict personnel control and closure measures, which has led to the export of PVC and PVC downstream products paving materials. decline. Second, public health incidents have affected the construction of new domestic real estate projects. Although housing prices in first-tier cities have risen, in the context of economic decline leading to a decline in residents ’incomes and the government ’s emphasis on housing and housing, real estate weakness is inevitable. The third is that global asset prices have fallen in an all-round way. At present, aluminum prices are at a low level, which has made a strong impact on the demand for PVC profiles from inexpensive aluminum profiles.


On the other hand, under the influence of public health incidents, the downward pressure on the domestic economy continues to increase, and the GDP fell by 6.8% year-on-year in the first quarter. In order to stabilize the economy, the government promotes large infrastructure projects to stimulate the economy. The infrastructure projects planned for implementation this year amount to trillions of yuan, which will support the demand for PVC. At the same time, during the public health event, the demand for medical equipment was good, which also supported the demand for PVC.


Overall, although the major infrastructure has been planned to be implemented, it has not been implemented. It is difficult to determine the intensity and timing of the PVC demand stimulation; although the medical device demand is performing well, it is difficult to change the overall PVC demand due to its small proportion of PVC demand. The current state of decline.


Corporate production reduction and self-help


As PVC prices continue to fall, profits of PVC production companies continue to decline, especially in the context of plummeting oil prices, the cost advantages of ethylene-based PVC production companies began to appear. As of April 16, the profit of calcium carbide method PVC production enterprises in East China was only 220 CNY/ton, while the profit of ethylene method PVC production enterprises was as high as 940 CNY/ton. Profits are at a very low level, forcing calcium carbide method PVC production enterprises to reduce production and save themselves, intensive maintenance in April. As of April 16, the operating rate of domestic PVC production enterprises was 70.10%, a month-on-month increase of 1.99 percentage points and a year-on-year decrease of 11.98 percentage points. Among them, the calcium carbide method operating rate was 70.24%, an increase of 0.13 percentage points from the previous month, and a year-on-year decrease of 12.79 percentage points; the ethylene method operating rate was 69.44%, an increase of 10.69 percentage points from the previous month, a year-on-year decrease of 8.23 percentage points.


However, even if PVC production enterprises continue to reduce production, the domestic PVC accumulation trend is still difficult to change. As of April 17, domestic PVC enterprise inventories were 77,800 tons, an increase of 3,1995.31 tons from the same period last year, an increase of 69.85%; social stocks were 717,808 tons, an increase of 131189.98 tons from the same period last year, an increase of 22.36%. At present, domestic PVC stocks are still at a high level, and there is no sign of decline. High stocks, especially the high inventory of production enterprises, have forced enterprises to reduce prices and take pressure on PVC prices.


Global storage capacity is exhausted


Domestic PVC production companies are mainly based on calcium carbide process, so small changes in oil prices have little direct impact on PVC costs. However, if the price of oil fluctuates greatly, the overall PVC price will inevitably fluctuate. Currently, there is an oversupply of crude oil and the global crude oil storage is exhausted. WTI crude oil futures contracts have unprecedented negative values in recent months, triggering market panic. Although this is a special situation and does not truly reflect the true value of crude oil, from the current situation, it is difficult to control the global public health incidents in the first half of the year, OPEC + production cuts, and countries are still facing severe problems of crude oil expansion and weak prices. Difficult to change, PVC rebound environment is destroyed.


In short, at present, the rebound momentum of the PVC market is exhausted, and the short-term thinking is maintained.