June 22nd, according to reports
This week (6.12-18), PVC showed a pattern of futures fluctuating and weakening, spot prices declining with increased volume, weak supply and demand, high inventory pressure, and cost support at the bottom. The core issue in the market is the persistent low demand during the off-season, coupled with a slight increase in supply and a worsening export outlook. Prices are more likely to fall than rise, but the downward space is limited by production costs.
I. Futures Market (DCE V2609 Main Contract)
The weekly focus continued to shift downward, with prices falling consecutively from Monday to Thursday. As of the close on June 18, the price stood at 4,521 CNY/ton. The week’s high reached 4,691 CNY/ton, while the low was 4,486 CNY/ton, resulting in a cumulative weekly decline of over 170 yuan. The main contract positions remained net short, with long positions continuing to reduce their holdings, giving short positions the upper hand. The monthly price spread remained weak, and the premium for distant-month contracts narrowed.
II. Spot Market
East China mainstream: The price of the calcium carbide method SG-5 grade is quoted at 4,520–4,630 CNY per ton, down 80–120 CNY per ton from the previous week. According to the commodity analysis system, the weekly price decline for East China’s calcium carbide method SG-5 reached 2.84%. Traders are offering discounts to facilitate sales, while downstream buyers are only replenishing stocks in small quantities to meet immediate needs, with no large-scale stockpiling taking place. As a result, market transactions remain sluggish. Spot prices show a slight premium over futures prices, with basis differentials ranging from 30 to 60 CNY per ton.
III. Factor Analysis
Supply side: Operating rates slightly increased, with limited additional maintenance, leading to a marginal increase in supply pressure.
This week, the overall capacity utilization rate of PVC in China is close to 70%, a slight increase from last week. The operation rate of calcium carbide plants in Northwest China has been slightly increased, with some previously shut-down units restarting sporadically; the operation rate of the ethylene process remains low, at around 50%. Several maintenance units along the coast are gradually resuming operations, and the operation rate of the ethylene process is also stabilizing, without further decline, but it is still at a historically low level.
Raw Material Costs: Calcium Carbide Prices Show Slight Support
Calcium carbide: In the northwest region of China, the mainstream price of calcium carbide is around 2,400 CNY/ton, with a slight increase of 100 yuan within the week. The loss from the calcium carbide method production has narrowed to some extent, but the industry as a whole is still in a loss-making range; according to the commodity analysis system, the price of calcium carbide rebounded in the middle of this week, with a weekly increase of 0.87%.
Ethylene: This week, international ethylene prices ranged from USD 1,140 to USD 1,150 per ton. The weakening crude oil prices have dragged down ethylene production costs, further squeezing ethylene processing profits. Overall, costs are constrained by a bottom-up support level but lack upward momentum, effectively locking in the potential for significant price declines due to raw material cost pressures.
Demand Side: Both domestic and external demand are weakening, and the market is entering the off-season.
Chinese downstream product operations have fully declined this week, with the operating rate still generally low, around 40%, significantly lower than the same period in history. The downstream real estate market is sluggish, and sectors such as profiles and pipes are widely impacted. Additionally, the terminal doors, windows, and home renovation sectors are also affected, leading to a decrease in upstream PVC demand. Terminal distributors are clearing inventory and generally slowing down raw material purchases.
On the export front, the data are also less than ideal. India’s zero-tariff exemption expires on June 30, and the anticipated resumption of the 7.5% import tariff is having a noticeable impact, leading to a decline in export performance. External buyers are generally adopting a wait-and-see approach, particularly with a marked drop in orders from India.
4. Future Market Forecast
From the perspective of PVC analysts, in the short term, maintenance on the supply side is gradually slowing down, and there is an expectation of increased production; however, downstream demand in China is weak, and these two factors will form a tug-of-war, with future bearish and bullish factors to some extent offsetting each other. Inventory remains a critical factor, and the accumulation of inventory is still ongoing due to weak demand. Overall, the pattern of weak supply and demand will continue next week, with the market trend mainly characterized by a narrow and slightly weak fluctuation.
