Price Trend
According to the data monitored by SunSirs (calcium carbide route factory average price), on July 23th, the domestic mainstream PVC price on average is 6487.5RMB/ton, which was 3.8% higher than the beginning of this month, 2.98% higher than last month, but down 3.64% year on year.
Analysis Review
On July, PVC market is rocketing initially, taking on an increasing tendency, and then it pulls back appropriately. Futures of this month is stronger, bringing the spot market increasing dynamic, but follow-up on the demand side is insufficient. And thus, with the condition that fundamentals vary slightly, continual rise lacks sustain. It is normal that there is a reasonable correction in PVC market, after increasing by 5.36% incessantly during early July. Due to the little range of correction, the manufacturers still support the price. Recently PVC spot market went stable, with confined demands caused by Southern rainy weather conditions, so the market trading is relatively flat. Some manufacturers offer discount for the shipment, and the demands from downstream are mainly rigid for replenishing. And some districts presold well due to the tight source of goods, people involved hold a wait-and-see attitude. For now, the demand side is still supported, and the society is de-stocking.With other beneficial factors including manufacturer repairment, partial tight source and increasing costs, we don’t need to hold pessimistic mind towards a short and sane correction.
As for the spot market, according to the data monitored by SunSirs, up to July 23th, the mainstream domestic price range of Type5 PVC production by calcium carbide method is 6350-6650 RMB/ ton. At present, in East China the mainstream domestic price range of Type5 PVC production by calcium carbide method is 6500-6600 RMB/ ton, in Hebei the mainstream domestic price range of Type5 PVC production by calcium carbide method is 6420-6500 RMB/ ton, in Hangzhou the mainstream domestic price range of Type5 PVC production by calcium carbide method is 6520-6600RMB/ ton, in Guangzhou the mainstream domestic price range of ordinary PVC production is 6520-6600RMB/ ton, and the offer price has a modest decline.
As for the futures, on Thursday, the opening price of V2009 contract is 6,545 RMB, 6,630 RMB highest, 6,520 RMB lowest, falling 55RMB, 0.83%. The volume is 164 thousand lots, increasing 41 thousand lots. The open interest is 162 thousand lots, decreasing 2.44 thousand lots.
In terms of demands, July is slack season, and the downstream happens to experience rainy days, so the operating rate of downstream is dropping. Respite climbing PVC price, the manufacturers don’t show great passion about stockpiling. The majority is rigid purchase, the minority is replenishment. As for specific field, the operating rate of tubing factories are in the moderate level, and the medical needs are well, but other manufactures still behave unsatisfactory. In general, PVC market demands pull back, but still hold supports that are less strong.
As the data shows, from January to June, the apparent consumption of PVC has accumulated to 10.0510 million tons, has a fall of 0.55% compared with 10.1065 million tons of the same period in 2019. And the average monthly apparent consumption is about 1.6753 billion tons that is a little higher than the same time of last year.
In terms of supply, in July the number of maintenance companies is not so many, but the previous maintenance companies have reopened, and productivity has promoted, so the supply burden is not so heavy. In South China, the sources of products are still tight, but there is no burden for sales, because most of them are pre-sale, which strengthens the confidence of upholding the price. While the later import goods are reaching the port, maintenance companies are recovering, productivity is rising and the new capacity is going to be put into action, the supply will turn to be bountiful.
According to the latest data released by National Bureau of Statistics, on 2020 June, domestic yield of PVC is 1.631 million tons, a 2% rise year-on-year. From 2020 January to June, domestic PVC amassed yield reached 9.688 million tons, a 3.2% drop year-on-year.
As regards to crude oil, on July 22, the price in US WTI crude oil futures market is down, and the financial statement of dominant contract indicates 41.90 dollars/barrel, decreasing by 0.02 dollars. The price in Brent crude oil futures market is up, and the financial statement of dominant contract indicates 44.29 dollars/barrel, increasing by 0.03 dollars. The price of oil has no virtual change on Wednesday. According to the date released a few days before by API, American crude oil inventory ramped up unexpectedly, and the data by EAI also shows the unexpected increase in crude oil and distillate oil. In addition, the tension between China and America is soaring.
As regards to ethylene, it presents a slight rising trend these days. Up to 22th, CFR Northeast Asia purchased 795-805 dollars/ton, and CFR Southeast Asia purchased 710-720 dollars/ton. As for European ethylene market, FD Northwestern Europe purchased 754-764 dollars/ton, and CIF Northwestern Europe purchased 695-703 dollars/ton. Generally, these days Europe, America and Asia ethylene market is mainly rising with stability, and the demands for ethylene are doing well. However, the trading atmosphere is ordinary, the increase is not apparent, for the price of oil continues to fluctuate between 40 dollars. The market has immersed into an anxious condition, because in many countries, the implementation of production reduction overtakes 100%. In addition, the benefits at the supply and demand level underpin the crude oil market, which formed the cost support for ethylene, and ethylene remains low for a long time, so SunSirs data analyst estimate that the price of the follow-up trend of ethylene will mainly present uplifting.
As regards to calcium carbide, in late July, the situation indicates fluctuant rise with small amplitude. Up to July 23, the mainstream producers of calcium carbide offered quotation at 2530 RMB/ton, taking on a small increase. The price of upstream ingredients is under low consolidation, and thus the support for calcium carbide is faint. Although the downstream condition about PVC is decreasing, the range is limited, so the motivation of downstream clients for calcium carbide is still weak. The supply of calcium carbide is strained because of the inadequate calcium carbide production at present, so prediction is incline to have a jostling small increase of the price of calcium carbide on the northwest in late July.
Market Outlook
SunSirs PVC analyst deems that nowadays PVC futures fluctuate to decline, and accordingly the spot market fluctuates slightly. Some companies choose to surrender part of the profits to sell off the goods, and the atmosphere of transaction is plain. Although the demands during the off season is insufficient, the support remains and short-time good maintenance still keeps on. Overall, it can be surmised that PVC will fluctuate modestly with the likelihood of proceeding correction, and it’s necessary to focus on the tendency of futures.
If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.