October 30th, news
This week (Oct 26-30), the Chinese PVC market fluctuated and rose, with spot quotations increasing. The futures market followed the energy and chemical sector's upward trend. The core issue was the passive production cuts due to losses and continuous destocking, which provided a bottom support. However, the weak recovery in downstream terminal demand made it difficult to drive a sustained upward trend. The futures and spot markets fluctuated together, with insufficient follow-up for high-priced transactions, and a strong wait-and-see sentiment in the market.
I. Spot and Futures Market Performance
On the spot market, mainstream calcium carbide‑based SG‑5 prices in East China and Shandong have gradually risen this week from 5,000–5,050 CNY/ton, with weekend transactions mostly in the 5,200–5,250 CNY/ton range. Traders have followed suit, raising their offers by 100–200 CNY/ton, while manufacturers have maintained firm pricing. However, actual deals are largely small‑volume, strictly for immediate needs, and high‑price transactions face significant resistance. Ethylene‑process‑derived supplies command higher prices than calcium carbide‑based products, keeping the price spread intact; yet, due to deeper losses, available inventory remains limited. According to the commodity analysis system, the weekly price increase for calcium carbide‑based SG‑5 in East China stood at 4.03%.
Futures end: The Dalian Commodity Exchange (DCE) PVC contract fluctuates within a range following the spot market. It is temporarily boosted by production cut expectations, but the upward momentum is limited due to weak demand expectations, with little change in the basis.
II. Market Trend Analysis: Supply Tightening Outweighs Weak Demand
Supply Side: The industry is operating at low levels, with losses driving a passive reduction in production.
This week, the overall operation of the PVC industry in China remained at a low level, with the overall load around 60%, which is within the lowest range of the year. For calcium carbide method PVC: enterprises that purchase acetylene continue to incur losses, while integrated enterprises rely on supporting acetylene and caustic soda to reduce costs, but they also actively control their load. Some facilities continue with periodic maintenance and load reduction, extending the production resumption cycle, and companies are controlling and reducing production to stabilize prices.
Ethylene production capacity is operating at just around 50% of its full potential, with substantial losses. Most externally sourced ethylene units have been shut down for extended periods, and their willingness to resume operations remains very low, making this a key source of supply contraction. This week, maintenance-related output losses remain elevated; the resulting production cuts are largely a passive response to cost inversions rather than a coordinated effort by producers to support prices. Should feedstock prices subsequently decline and profit margins recover, there is potential for a rebound in production.
Overall, the reduction in supply this week was not due to proactive production control to maintain prices, but rather a passive reduction in supply caused by cost inversion. This serves as a bottom support factor, but lacks strong bullish signals from proactive and concentrated price stabilization.
Cost side: There is support at the bottom, but there is insufficient upward momentum.
Upstream calcium carbide main production areas in China have maintained relatively stable quotes, with support from the cost of semi-coke and coal. Calcium carbide has slightly rebounded, with data showing a 0.4% increase this week. This has established a cost floor for PVC produced by the calcium carbide method. Internationally, crude oil prices are fluctuating at high levels due to geopolitical risks in the Middle East, driving up the price of ethylene, and the cost pressure on PVC produced by the ethylene process continues to exist, similarly limiting the downward space for PVC spot prices. The most notable feature of the cost end this week is that there is a bottom, but there is insufficient upward momentum, and there is no sustained and significant rise in raw material prices.
Demand Side: Peak-season performance fell short of expectations, with downstream demand remaining subdued and driven primarily by essential purchases.
Downstream pipe and profile production has been slow to pick up, with real estate construction remaining sluggish and investment generally lower than in the same period historically. Manufacturing orders are mainly short-term and for restocking essentials. After prices have risen, downstream resistance has increased, and the willingness to build up inventory is weak. Most adopt a just-in-time procurement strategy and dare not stockpile. Similarly, there has been limited improvement in other downstream sectors such as soft products, sheets, and flooring materials, with poor order transmission.
On the export front, earlier inventory‑building in India had temporarily boosted inquiry volumes; however, with the removal of export tax rebates, China’s price competitiveness has weakened, and any modest diversion of external demand has been insufficient to reverse the country’s relatively subdued market dynamics. Downstream buyers generally adopt a just‑in‑time procurement approach: whenever prices on the exchange surge sharply, purchasing activity promptly contracts, exerting clear downward pressure on pricing.
This week, both PVC manufacturers and social inventory in China are at high levels, with a slow destocking process. The market has not yet shown signs of rapid and significant destocking. Traders are mostly controlling their inventories, following the market trend with light positions, and are unwilling to stockpile large quantities. The inventory pressure has only marginally eased, without any substantial clearance.
3. Outlook for the Future Market
It is believed that in the short term, PVC will likely continue its consolidation pattern, with support coming from consistently low production, destocking, and bottoming out of costs; the biggest constraint on the upside remains weak terminal orders in the real estate sector and insufficient restocking willingness from downstream players in China.
Overall, in the short term, the upside for PVC prices in China may be limited, with a trend of maintaining high levels and consolidation.
