This Week's PVC Market Continues to Rise (3.2-3.5) in China

March 5 news

I. Price Trends

This week (Mar 2-5), China's PVC market continued to show a strong trend, with a significant rise in futures driving up spot prices. The gradual resumption of downstream operations and robust export demand supported market sentiment. However, high social inventory levels still pose a pressure on price increases. Data shows that this week, the price of calcium carbide method SG-5 PVC in the East China region increased by 3.61%, with the current market price ranging from 4850 to 4900 CNY per ton.

II. Market Analysis

Supply Side: The current operating rate of the PVC industry in China is maintained at around 80%, which is generally at a moderately high level. The operating rate of the calcium carbide method has slightly decreased, while that of the ethylene process has slightly increased. Some companies have maintenance plans, leading to some relief in supply pressure.

On the demand side, the operating rates of downstream pipe and profile manufacturers have rebounded to over 60%, and those of soft goods and packaging manufacturers have also exceeded 60%, indicating that rigid demand is gradually being released. Affected by the impending cancellation of export tax rebates, foreign trade orders surged in March, with companies rushing to sign contracts ahead of time, providing some support to the market.

In terms of inventory, Chinese PVC companies have an inventory of 504,000 tons, a slight decrease from the previous period, but social inventory remains as high as 1,353,000 tons, which is at a high level in recent years, a 58% increase year-over-year, and it remains an important factor restraining the sustained rise in prices.

On the cost side, raw material calcium carbide prices have been trending weaker. According to data, calcium carbide prices saw a 0.65% decrease in March, leading to a slight weakening of cost support for PVC produced via the calcium carbide method. Meanwhile, ethylene-process costs are significantly affected by fluctuations in international crude oil and ethylene prices.

III. Future Market Forecast

Overall, it is believed that in the short term, PVC will show a strong performance driven by the strengthening of crude oil, the resumption of downstream operations, early export activity, and some maintenance. However, the situation of high inventory and supply exceeding demand has not changed, so it is expected that the market will mainly fluctuate, with limited momentum for sustained price increases.