The price of polyvinyl chloride has been a black horse in plastic industry

Since August this year, with the overall fluctuation of the plastic market, the price of  PVC has risen steadily. From August to October this year, the price of PVC has risen by more than 1200 CNY/ton, an increase of more than 22.3%, making it a black horse in the plastic industry.  China is a country with less gas, more coal and less oil. At present, CALCIUM carbide is the main production of 80% polyvinyl chloride in China. Therefore, the price trend of Calcium Carbide seriously affects the domestic price trend of polyvinyl chloride. Since the middle and late July of this year, the Central Environmental Protection Inspection Unit has entered Inner Mongolia, Ningxia and other places. Due to the huge energy consumption and serious environmental pollution, calcium carbide production has become the focus of supervision by the Environmental Protection Inspection Unit. Under the pressure of environmental protection, the production enterprises of calcium carbide and polyvinyl chloride in Inner Mongolia were forced to close down, resulting in a shortage of calcium carbide supply in the short term, and the quotation continued to rise. Individual production enterprises reduce start-up load to maintain production, affecting the domestic supply and demand of polyvinyl chloride, leading to the continuous increase in quotations from manufacturers. At present, the price of calcium carbide remains high, which supports the price of polyvinyl chloride. It is difficult for the price of polyvinyl chloride to fall significantly in the short term. In addition, the price of coal and orchid charcoal is rising steadily, and the price of polyvinyl chloride will continue to rise in the later period.

In addition, the rising road freight also affected the production cost of polyvinyl chloride. On August 18 this year, the Ministry of Transport and the Ministry of Public Security jointly issued the Circular on the Issuance of the Special Action Plan for the Regulation of Illegal and Overloading Behaviors of Highway Freight Vehicles. From September 21 this year to August 2017, the focus will be put on the improvement, and the prominent illegal acts such as illegal and overloading of Highway Freight Vehicles and forced punching of cards will be severely cracked down. Strictly implement the national standard "Outer Size, Axle Load and Quality Limit Value of Automobile, Trailer and Vehicle Train". That is to say, the cargo transported by vehicles shall not exceed the total quality of 49 tons and the height limit of less than 4 meters. According to the expectation of the people concerned, the rate of increase of highway freight will be about 30-50 CNY/ton at that time. At present, the policy has just been implemented, the market is still waiting and waiting. Some automobiles are out of service, restricting downstream demand, reducing market arrivals. Some manufacturers say that compared with the previous period, there are fewer transported goods and higher freight charges. The increase in cost can only be added to the price quotation of PVC, resulting in a sustained increase in the price of PVC in the short term.

Affected by the national environmental protection inspection, some PVC factories with their own calcium carbide factories are forced to limit production or shut down the calcium carbide workshop, resulting in a short-term decline in the start-up rate, tight supply of calcium carbide, reduced factory shipments, and overall reduction of social inventory. At the beginning of September, Hangzhou held the G20 Summit. Railway freight transportation was suspended and market transactions in Hangzhou basically stagnated. Trading in South China is normal, with frequent spot replenishment quotations by traders, the sentiment of speculation is serious. At the end of the summit, downstream manufacturers in Hangzhou resumed construction one after another, and there was a small peak of replenishment in the East China market in a short time, which led to a further shortage of supply. After a period of production, the Pre-Inventory of downstream products manufacturers in South and East China is almost exhausted. The recent increase in PVC has also prompted some traders and producers to stock up on large quantities, or to sell for their own use, or to make profits when they are ready to sell at higher prices later on. These factors have further pushed up the price of PVC. From the downstream market demand, profiles, pipes, doors and windows account for 55% of the downstream consumer market of PVC. Therefore, the real estate market demand seriously affects the upstream PVC manufacturer's start-up and quotation. According to statistics, from January to February this year, real estate investment jumped to 4.8% from 2.5% in December 2015, and accelerated to 8.2% in March. From January to August 2016, the new construction area of housing in China was 106,834,000 square meters, an increase of 12.2% over the same period of last year; the construction area of housing increased by 4.6% and the completed area increased by 19.1% over the same period of last year; and the sales area of commercial housing in China was 87,451,000 square meters, an increase of 25.5% over the same period of last year. The booming real estate market will undoubtedly drive the sale of downstream PVC pipe profiles. Historically, the impact of the real estate market on PVC products is often half a year behind. From September to October this year, the downstream market of PVC products has just improved. The price rise of PVC is closely related to downstream demand and start-up.

Since 2003, China's PVC production capacity has expanded rapidly, and began to gradually saturate in 2005. Overcapacity gradually manifested in subsequent years. After 2008, the situation of overcapacity began to deteriorate seriously, the rate of capacity growth slowed down gradually, and blind expansion of the industry led to polychloride. The ethylene industry has a serious overcapacity and a serious loss. It is urgent for the ethylene industry to reduce its production capacity. In 2016, under the advocacy of the national "one belt and one way" policy, the export volume of PVC in the first half of Xinjiang, the main production enterprise in China, reached 210 thousand tons, far exceeding the level of the same period last year. In just three months, Tianye's sales of PVC products in Africa doubled, effectively defusing domestic supply and demand pressures. Xinjiang Tianye Logistics Industry relies on domestic and foreign market platforms, and exports and sells chemical products to 109 countries in Asia, North and South America, Europe and Africa. According to Chinese Customs statistics, in August 2016, the export volume of pure PVC powder in China was 142,000 tons, up 15.57% annually and 76.44% year-on-year. From January to August this year, the cumulative export volume of pure PVC powder was 836,000 tons, up 56.99% year-on-year, and "going out" succeeded in resolving domestic excess capacity, with initial results in supply-side reform.