This week (7.27-31), PVC showed an overall trend of synchronous oscillation and decline. The short-term speculative market driven by the geopolitical premium of Middle Eastern crude oil in the early stage has completely receded, with weakened costs, slight rebound in supply, and weak demand for terminal building materials during the off-season forming a triple suppression. Spot prices have generally fallen throughout the week, and the focus of futures has continued to shift downwards; The high inventory level limits the rebound space, and market transactions maintain a weak and volatile market with weak supply and demand, loose costs, and a “buy down, not buy up” trend for essential needs.
1、 Futures market
On Monday (7.23), the closing price was 4618 yuan/ton; On Friday (7.31), the closing price was 4479 yuan/ton, with a cumulative decline of nearly 140 yuan/ton for the whole week. The lowest drop during the week was 4438 yuan/ton, and it has repeatedly broken the stage low point.
2、 Spot market
As of Friday, the mainstream in East China: the SG-5 model of carbide method was reported at 4420-4470 yuan/ton. Spot prices in various regions of the country generally fell this week, with a range of 80-120 yuan/ton. The SG-5 model of East China carbide method fell by 3.05% in the week. Traders offered discounts to sell, and downstream only needed small batches of replenishment without centralized stocking, resulting in light market transactions.
3、 Factor analysis
On the supply side, there has been a slight rebound in construction, with enterprises resuming work and the marginal increase in supply pressure
This week, the overall capacity utilization rate of PVC exceeded 70%, which continued to rise compared to last week. Centralized resumption of maintenance equipment and increased domestic supply of goods; The start of ethylene production has slightly declined due to fluctuations in ethylene costs, and coastal facilities have actively controlled production, still at a historical low.
Raw material cost: Electricity stone material is declining and the cost is weak
Calcium carbide: The price of calcium carbide has fallen, the supply of goods is sufficient, the upstream blue carbon is stable, and the willingness of calcium carbide manufacturers to ship is strong. The production cost of PVC by calcium carbide method has been lowered, and the pressure of enterprise losses has been slightly alleviated, lacking the driving force of strong price support on the cost side. Calcium carbide has experienced a significant decline, with a drop of up to 3.28% within the week.
Ethylene: Temporary ceasefire between the United States and Iran, significant drop in international crude oil prices during the week, lower cost of ethylene raw materials, and synchronized decline in the cost of PVC produced by coastal ethylene methods; The profit of the ethylene plant has shrunk, but there is no upward support on the cost side, which cannot drive the price increase of PVC.
Demand side: Weakening of internal and external demand, market entering off-season
The domestic downstream product production has fallen across the board, and the downstream production rate this week is still relatively low, generally around 40%, significantly lower than the same period in history. The downstream real estate market is sluggish, and industries such as profiles and pipes are generally impacted. In addition, terminal doors and windows, as well as home decoration, have also been dragged down, resulting in a decline in upstream PVC demand. Terminal distributors are reducing inventory and generally slowing down raw material procurement.
In terms of exports, the data is flat, with no increase in inquiries from Southeast Asia and India. Domestic PVC export profits have slightly weakened, making it difficult for foreign trade to hedge against excess domestic supply. The role of exports as a bottom support is limited.
4、 Future forecast
According to PVC analysts, in the short term, on the supply side, there are still expectations of an increase in production, difficulty in improving off-season demand, and sustained suppression of high inventory; The cost side may form support, and the downward space in the later stage is limited. Due to weak demand, the accumulation of inventory is still ongoing. Overall, the main trend next week will be interval volatility, and it is difficult to see a one-sided market trend.
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