September 18th News
This week, China’s PVC market saw both futures and spot prices weaken simultaneously, with prices fluctuating downward. Market sentiment is heavily characterized by wait-and-see attitudes, and overall trading activity remains subdued. The hype driven by earlier real estate policies is gradually fading, as the market returns to fundamental-driven dynamics. Supply has slightly increased, while demand is experiencing a seasonal rebound but lacks sufficient strength. The industry continues to operate at a loss, and costs are providing bottom-up support for prices. According to the commodity analysis system, the weekly price of SG-5 produced via the calcium carbide method in East China fell by as much as 5.1%.
I. Price Trends
In stock (SG‑5 calcium carbide method)
East China cash warehouse pick-up mainstream: 4,780-4,860 CNY/ton; the Shandong Linyi market cumulatively decreased by 1,000-2,000 CNY/ton during the week, and slightly eased to 4,700-4,750 CNY/ton over the weekend.
Ethylene-based PVC: 5,350–5,500 CNY/ton. Prices are relatively resistant to declines, supported by the cost of ethylene feedstock.
Futures Market
Dalian Commodity Exchange (DCE) PVC main contract saw a continuous correction within the week, with the policy-driven rebound previously observed now retreating. The market followed the weakening of spot prices, leading to a slight repair in the basis. Bullish market confidence has declined, and in the short term, the market is mainly characterized by weak oscillation. ...
II. Trend Analysis
Supply Side: Partial Resumption of Maintenance, Slight Increase in Operating Rates
This week, some of the previously shut-down units have resumed production. Manufacturers such as Inner Mongolia Junzheng, Formosa Ningbo, and Dezhou Shihua have generally increased their operating loads. There are not many new maintenance shutdowns, and the operating rate has increased to nearly 70%, which is still relatively low compared to the same period in recent years.
But currently, calcium carbide method and ethylene process enterprises in China are generally experiencing losses: especially the losses for the ethylene process are more significant. These losses suppress the willingness of enterprises to increase production, resulting in limited recovery in operations and difficulty in maintaining high prices. If prices continue to decline later, it is not ruled out that some enterprises may again reduce production and lower loads to protect prices.
Demand Side: The Golden September peak season lacks strength, making it difficult to support sustained high levels.
From the perspective of downstream demand, the operating rates of plastic products enterprises have slightly increased, with overall downstream operations rising to over 40%, a small improvement from the previous period, but significantly lower than the peak season levels in previous years. Real estate remains the core drag, with limited transmission of final property completions. Pipe and profile manufacturers have not seen a significant increase in new orders, and most are purchasing according to their needs, buying as they use, with insufficient stockpiling. Moreover, the absolute value of overall inventory remains high, and the pace of destocking is slow, with inventory pressure yet to be substantially alleviated.
Exports: Overseas ocean freight costs have risen, leading to slightly stronger quotations in overseas markets. However, actual buying interest from overseas remains limited, resulting in only modest growth in exports and making it difficult to offset the pressure from China.
Cost Side
Calcium carbide: Coal and semi-coke prices remain high, providing strong cost support for calcium carbide. However, the selling price of PVC is below the cost line, and the calcium carbide method continues to incur losses, forming a hard support at the lower end of the spot market, limiting the potential for a significant decline. According to the commodity analysis system, although calcium carbide prices are at a high level, there is a trend of retracement, with a slight decrease of 0.74% this week.
Ethylene process: International crude oil prices remain volatile at high levels, and ethylene feedstock costs stay elevated, further widening losses for ethylene-process enterprises and putting downward pressure on ethylene-process operating rates.
3. Future Market Outlook
PVC analysts believe that in the short term, PVC will maintain a weak and fluctuating pattern: there are still many negative factors in the market, with expectations of supply recovery and the possibility of further increases in operating rates. Moreover, terminal demand is weak, and the improvement in real estate terminal demand is limited. Downstream buyers are cautious, and high inventories need to be digested. The weak sentiment in the futures market is also suppressing spot prices. Therefore, PVC prices are expected to remain weak in the near term.
