PVC prices are adjusted in stages, and the tight supply pattern remains unchanged

With the phased adjustment of PVC prices, the contradiction of profit distribution in the industrial chain has weakened, and there is a reduction in the PVC supply side, and the terminal operating rate has basically returned to the peak season level, which is conducive to the digestion of PVC inventory in the later period. PVC still rises after the adjustment is fully adjusted. Expectations.

In February 2021, the U.S. plant shut down unexpectedly. In March, domestic energy consumption was double-controlled, and the output of calcium carbide decreased, which in turn triggered a decline in PVC production load. The contradiction between global PVC supply and demand was further fermented, and domestic PVC prices rose rapidly. According to monitoring data, the PVC price index on March 22, 2021 was 8,933 CNY/ton, which was 34% higher than the average value of 6,666 CNY/ton since April 2017. The current price is at a relatively high level. Under the current situation, the profit margin of downstream products has dropped sharply, some industries have suffered losses, the enthusiasm for purchasing raw materials has declined, and the inventory is maintained at a low level.

From the perspective of the global PVC supply and demand pattern, since 2009, the global PVC capacity utilization rate has increased first and then decreased. In 2019, the PVC capacity utilization rate was 84%, and the capacity utilization rate in 2020 was 78%. From 2009 to 2020, the global PVC production capacity expansion will be fast and then slow, with a compound annual growth rate of 2.7%. Global PVC demand is basically in a stable growth stage, with an average annual growth rate of 3.4%. The global PVC supply and demand are basically in a tightly balanced pattern. The emergency shutdown of the United States has gradually amplified the contradiction between supply and demand. The price of external PVC has risen rapidly. The domestic export arbitrage space has opened up and export orders have been released.

From the perspective of changes in China's production capacity, 2014-2016 is the clearing-out period for PVC production capacity, with an average annual production capacity drop of 500,000 tons, and an average increase in production capacity from 2017 to 2020 at 935,000 tons. From 2009 to 2020, the compound growth rate of China's PVC production capacity is 3.7%.

China's apparent PVC consumption has shown a pattern of increasing year by year, with an average growth rate of 6.3% from 2009 to 2020. From the perspective of output and apparent consumption, 2009-2013 was the stage when apparent consumption was greater than output, and it mainly relied on net imports to make up for the domestic supply gap; 2014-2017 was basically in a pattern where output exceeded apparent consumption, mainly Adjusting domestic relative surplus production through net exports; from 2018 to 2020, apparent consumption is greater than production, domestic supply and demand are in a tightly balanced pattern, and net imports are used to adjust domestic gaps. The unexpected situation in the United States has triggered high external prices. Although domestic PVC prices are at a high level, they are in a global price depression.

Energy consumption in Inner Mongolia was double controlled in March. The domestic supply of calcium carbide was affected. The price of calcium carbide rose rapidly, reaching around 5,000 CNY/ton. PVC companies that purchased calcium carbide suffered losses or insufficient supply of calcium carbide, and the overall PVC operating rate dropped. Around 80%. According to market feedback, it is expected that calcium carbide will be affected the most on March 25. The indicator task of dual energy consumption control in the second quarter is expected to be broken down steadily, and the impact on calcium carbide will be relatively dispersed. In the second quarter, the influence of calcium carbide on PVC production will gradually weaken, so as to achieve a new production balance.

The US installation is expected to resume in May. The burden of American installations and domestic installations fell, and the demand side basically recovered to a relatively high annual level, which is conducive to the further digestion of subsequent PVC stocks. In the inventory digestion, along with the adjustment of the industrial chain, the profit rate of each link will be balanced again.

On the whole, the pattern of tight PVC supply has not changed. The staged high PVC price has suppressed downstream demand to a certain extent. However, with the staged adjustment of PVC prices, the contradiction of profit distribution in the industrial chain has weakened, and there is a reduction in the supply side of PVC. However, the PVC terminal operating rate has basically returned to the peak season level, which is conducive to the digestion of PVC inventory in the later period. After the adjustment is fully adjusted, there is still an expectation of rising PVC.