The domestic PVC market fluctuates and rises

On June 15, the domestic mainstream spot PVC price was 6380 yuan (ton price, the same below), an increase of 330 yuan from the end of May, an increase of about 5.5%. "Due to the reduction in global PVC import and export trade volume, domestic supply pressures have been reduced; meanwhile, downstream demand has recovered better, PVC destocking has been faster, and the cost of raw materials has increased. It is expected that short-term PVC prices will continue to fluctuate and rise." Longzhong Information PVC Industry Chain Analyst Shi Lei believes.

Imports are expected to decrease

China is the world's largest producer and consumer of PVC. In September 2019, the 16-year anti-dumping policy was implemented, marking China's PVC industry's true participation in international competition. After the epidemic, China's PVC demand resumed, hitting India's epidemic-stricken country and leading to the closure of PVC's global export destinations. China has once again become a target country for global PVC imports and exports.

"The annual global PVC trade volume is more than 7 million tons. The United States is the world's largest exporter, with exports accounting for about one-third of the global total. The supply of U.S. PVC has a great impact on the market. From February to May, the United States has large The PVC equipment is overhauled, and the overhaul cycle is between 15 and 30 days, so the market supply is reduced. At the same time, the epidemic in the United States increased from April to May, and the demand for aluminum alloy products in Europe and the U.S. auto industry decreased significantly, resulting in the chlor-alkali industry starting load The reduction in PVC production has correspondingly reduced, and the export capacity of the United States has shrunk. In Asia, Japan and South Korea, PVC equipment is mostly old equipment. In May, PVC companies carried out large-scale maintenance, and the maintenance cycle was also 15 to 30 days. The market supply also decreased. Therefore, the total amount of PVC exported from the United States and Asian countries to China is expected to decrease." Shi Lei analysis said.

It is understood that Taiwan Formosa Plastics' June shipping schedule offers CFR China at US$690~700, up US$30~40 from May; July shipping schedule offers rose US$90~100, of which CFR China offers US$780~790 and CFR India offers USD 830~840. The continuous quotation of the shipping schedule has rebounded sharply, which will effectively boost the domestic PVC market.

Rising raw material prices

The main raw materials of PVC are calcium carbide and medium carbon. First of all, from the blue charcoal market, from the end of May, the price of blue charcoal began to explore. As of June 15, the ex-factory ex-factory price of blue charcoal intermediates in northern Shaanxi was 530-560 yuan, a slight increase of about 20 yuan from the low-end price in early May. "Affected by rising raw coal prices and the continued recovery of downstream demand, downstream and traders are actively receiving goods. In addition, after the release of the Shandong Coal Restriction Policy, some steel mills and power plants switched to purchasing blue char coke noodles, so the overall inventory of blue charcoal fell. It is good for the market to go up," said Zhao Yu, an analyst at Zhuo Chuang Information Lantan.

Look at the calcium carbide market. "Because of the large number of parking maintenance in the early production enterprises and the reduction in the supply of calcium carbide, the price of goods in the market has increased. As of June 15, the mainstream price of calcium carbide in Wuhai region was 2550-2580 yuan, an increase of 350-380 yuan from the beginning of May. At present, the operating rate of calcium carbide enterprises is constantly increasing. Among the 28 sample companies monitored by Longzhong, the production capacity is 14.2 million tons per year. The overall operating rate in early June is about 81.23%, an increase of 10.66% from the first week of May. With the increase in supply, the calcium carbide market may be limited or limited, and it is expected that the short-term market will remain stable." Long Zhong Information calcium carbide analyst Zhang Zhongying said.

From the perspective of ethylene, a raw material for the PVC process of ethylene, the increase in crude oil prices in the earlier period has caused ethylene to rise to varying degrees. On June 12, the US ethylene market was quoted at US$260, up US$32 from May 12; the Southeast Asian ethylene market was offered at US$755, up US$320 year-on-year.

The rising prices of raw materials such as blue charcoal, calcium carbide and ethylene have brought cost support to the strong PVC market.

Faster destocking

"In April, the price of foreign PVC dollars in the US was very low. From mid-late April to May, China signed many import orders. Because of the shipping schedule, the import supply in May has gradually reached a part, and it is expected that June will focus on arriving in Hong Kong. It should be a bearish. But because these goods are sold and not sold, so this bearish factor has not yet been reflected, and it has little effect on the accumulation of inventory." Yu Jiangzhong, a PVC analyst at Zhuochuang Information.

Shi Lei said that the recent recovery of domestic downstream demand was better than expected, and PVC destocking was faster. The specific manifestation was that orders were concentrated in early May, and companies were producing according to orders that month.

"From the perspective of inventory decontamination, on March 27, the sample inventory of the two major PVC markets in East China and South China reached a record high of 492,700 tons. As of June 12, the inventory has fallen to 292,800 tons and the cumulative destocking is 19.99 10,000 tons, a drop of up to 40.57%. The sharp decline in inventory has led to the rise in PVC prices." Yu Jiangzhong said.

On June 15, the main closing price of PVC futures was 6285 yuan, up 245 yuan from the end of May, or a 4.1% increase. The rise in the futures market will also play a leading role in the PVC spot, and it is expected that the market will continue to rise in a volatile manner.