PVC Weekly Report: Futures Show Green Tendencies as PVC Market Remains Deeply Affected

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PVC Weekly Report: Futures Show Green Trends as PVC Market Remains in a Difficult Situation April 13, 2017 – FindPlastic Insights 1. Forecast for the PVC market next week: Based on an analysis of FindPlastic’s transaction data and an assessment of other market factors, it is expected that the domestic PVC market will continue to show a pattern of fluctuation and consolidation next week. Raw calcium carbide: It is expected that the domestic calcium carbide market will remain in a state of confusion and instability next week, with prices struggling to move either up or down; uneven distribution of supply in the market will continue in the short term. Supply: Companies have few plans for maintenance work next week; social inventory remains high, and there is limited change in corporate supply volumes. Downstream demand: Environmental inspections are becoming more stringent; it is understood that the North China region is the most affected, with some areas in Southwest and East China also facing strict scrutiny. Demand from end-product manufacturers is expected to decline next week. 2. Key topics to watch next week: 1. Pay close attention to the trends in futures prices: Recently, there has been an increasingly clear trend toward consistency between futures and spot prices, so this requires special attention. 2. Inventory levels across all parties: The issue of high inventory levels that fail to decrease persists, with a surplus supply becoming increasingly evident. 3. Environmental inspection status: This year, efforts to enforce environmental protection have increased rather than decreased, and the focus is on end-users; therefore, attention should be paid to the status of environmental inspections as well as their results. 4. Maintenance status: Social inventory remains high and does not decline, while corporate inventory is increasing steadily; only by carrying out maintenance activities can companies alleviate the situation of continuously rising inventory levels. This Week’s Review 1. Overview According to the FindPlastic market transaction index, the transaction prices in China’s PVC market continued to decline compared to last week. PVC futures continued to decline and traded at low levels; the spot market saw prices drop as a result, with China’s PVC plastic trading index falling by 12.9 points this week compared to last week. Figure 1: Trend chart of the FindPlastic transaction index (domestic PVC market) http://hq.zhaosuliao.com/upload/editor/image/20170413/1492062356882092940.png 2. Analysis of FindPlastic’s transaction data: According to this week’s transaction data provided by FindPlastic (see Table 1), prices in the domestic PVC market continued to drop this week, with weak trading activity ； Downstream demand is weak; end-product manufacturers prefer to buy when prices rise rather than fall, and purchase in small quantities as needed ； The market as a whole is currently experiencing an imbalance between supply and demand; inventory levels remain high, and suppliers are offering discounts to sell their goods ； Table 1: Comparison of market transaction prices for plastic PVC this week (unit: yuan/ton). Manufacturer specifications, transaction prices on April 7th and April 13th, price changes, delivery methods: East China – SG-561, prices 50,625–6,050–2,000; including tax, pick-up available. South China – SG-561, prices 59,500–6,000–2,300/–2,200; including tax, pick-up available. North China – SG-556, prices 50,500–5,700–5,550–150; pre-tax, pick-up available. Supply volume analysis: 1. Estimated PVC production this week. The operating rates of domestic PVC manufacturers have seen only slight adjustments this week; Xinjiang Yihua has been shut down for maintenance due to an accident since February 13th, for a period of one month ； Yanhu HaiNaing was shut down for maintenance for a month; Xinjiang Tianye carried out a full-scale plant maintenance on April 10, with the operating load of the facilities remaining at 70% ； Tianyuan in Yibin, Sichuan, will carry out plant maintenance on April 10; the work is scheduled to last 10 days, so there will be limited changes in supply levels. Figure 2: Estimate of domestic PVC production 2. Plant maintenance Table 2: Statistics on companies undergoing maintenance recently (unit: 10,000 tons/year) Statistics on recent changes in PVC plants Company Name, Production Process, Capacity, Maintenance Status Salt Lake Haina – Calcium carbide process: Shut down on February 14 due to a malfunction; restart time is uncertain. Xinjiang Yihua – Calcium carbide process: Shut down for maintenance on February 17; restart time is uncertain. Sichuan Jinlu – Calcium carbide process: Maintenance planned for May. Sichuan Yibin Tianyuan – Calcium carbide process: Maintenance on April 10; expected to last around 10 days. Baotou Haiming – Calcium carbide process: Maintenance planned for April. Inner Mongolia Yihua – Calcium carbide process: Maintenance planned for late March. Inner Mongolia Yili – Calcium carbide process: Minor maintenance of 3 days planned for end of March; may also be postponed to April. Inner Mongolia Junzheng – Calcium carbide process: New plant site: Shutdown for one week in mid-April. Xinjiang Tianye – Calcium carbide process: Full plant maintenance on April 10; expected to be completed by the end of the month. Ningxia Jinyuyuan – Calcium carbide process: Maintenance planned for April; a new PVC plant with a capacity of 200,000 tons is scheduled to come online in May. Qilu Petrochemical – Ethylene process: Maintenance planned to start on May 4 and last for 40 days. Henan Lianchuang – Calcium carbide process: Maintenance planned for May. Shaanxi Beiyuan – Calcium carbide process: Reduced operation from March 14 to March 25 for maintenance. Jilantai – Calcium carbide process: Maintenance planned to be postponed until June. 3. Social inventory According to data from FindPlastics, as of April 9, social inventory levels in major domestic regions have decreased slightly, with a minor reduction in the East China region, while levels in South China remained unchanged. Turning to this week, futures prices have been fluctuating downward while spot shipments remain weak; therefore, it is expected that social inventory levels will continue to decline slightly on a weekly basis. Figure 3: PVC inventory statistics in East and South China. 4. Plant operations: This week, the operating rates of domestic PVC manufacturers saw only slight changes. Xinjiang Yihua’s plant has been shut down for maintenance due to an accident, with the shutdown lasting one month starting from February 13th ； Yanhu HaiNaing was shut down for maintenance for a month; Xinjiang Tianye carried out a full-scale plant maintenance on April 10, with the operating load of the facilities remaining at 70% ； Tianyuan in Yibin, Sichuan, will carry out equipment maintenance starting on April 10, with a planned duration of 10 days; as a result, production start this week will be slightly delayed. Figure 4: Statistics on the operation status of PVC plants in China – Demand analysis. According to FindPlastics’ statistics, there has been a slight decline in the operation rate of PVC-based product manufacturing plants in China, mainly due to increased environmental inspections; small-scale family-run workshops that produce such products have been particularly targeted by these strict measures. Therefore, it is expected that the production activity of finished goods manufacturers next week may decline slightly as a result. Figure 5: Trend of PVC product manufacturers’ production activity. PVC futures market: This week, the main 1709 contract for PVC remained at low levels. Specifically, it opened at 6,050 yuan per ton at the start of the week, reached a high of 6,110 yuan per ton, a low of 5,965 yuan per ton, and closed at 6,035 yuan per ton; the settlement price was 6,030 yuan per ton. On Thursday, the settlement price was 5,815 yuan per ton, representing a weekly decline of 215 yuan per ton. The trading volume was 2,290.42 million lots, while the open interest was 1,403.62 million lots. Technically, the PVC1709 contract has seen a sharp decline; it is testing the support level around 5,750 yuan per ton at the lower end, while facing resistance near 5,950 yuan per ton at the upper end. In the short term, it is likely to remain within this range of fluctuations, and it is recommended to trade within the range of 5,750–5,950 yuan per ton. Figure 6: Trend chart of domestic PVC futures settlement prices. http://hq.zhaosuliao.com/upload/editor/image/20170413/1492068598443079307.png PVC ex-factory prices: This week, most manufacturers have reduced their ex-factory prices. Currently, demand from downstream sectors is weak, there are few new orders, and manufacturers have high inventory levels. The prevailing ex-plant price for type 5 calcium carbide in Shandong region, on credit terms, is 6,000–6,150 yuan per ton, while in Inner Mongolia it is 5,800–5,900 yuan per ton on credit terms; the actual transaction prices are lower. Table 3: List of Ex-factory Prices for Domestic Manufacturers
Manufacturer’s Production Capacity (10,000 tons/year), Operating Rate, Model, Price on April 7, Price on April 13, Price Change, Remarks
Taizhou Liancheng: 45, 80%, US6068, 50,6700 – 150; New price in April: US6568, 50,6700 – 150; US7069, 50,6750 – 200. Delivery within Sichuan.
Chengdu Huarong: 10,50%, SG-56, 300,6150 – 150; Delivery within the region.
Qilu Petrochemical: 25,90%, S1000, 6450, 6350 – 100; Ex-factory delivery against cash. S700, 6600, 6500 – 100; Ex-factory delivery against cash.
Dezhou Shihua: 30,90%, SG-7/8, 6350, 6250 – 100; Ex-factory delivery against cash.
Shandong Xinfafa: 60,90%, SG-56, 020, 5900 – 120; Ex-factory delivery against cash.
Shandong Dongyue: 12,100%, SG-56, 200, 6050 – 150; Ex-factory delivery against cash.
Tangshan Sanyou: 40,90%, SG-56, 200, 6100 – 100; Ex-factory delivery under acceptance terms.
Hebei Shenghua: 26,90%, SG-56, 000, 5850 – 150; Local ex-factory price, delivery under acceptance terms.
Haohua Aerospace: 40,80%, SG-56, 100, 5950 – 150; Ex-factory price outside the province, delivery under acceptance terms. SG-36, 230, 6080 – 150.
Henan Lianchuang: 30,60%, SG-56, 100, 6000 – 100; Ex-factory price outside the province, delivery under acceptance terms.
Jiyuan Fangsheng: 59,0%, SG-56, 100, 5950 – 150; Delivery under acceptance terms in the surrounding area.
Jilantai: 40,80%, SG-56, 150, 5850 – 300; Delivery under acceptance terms in the surrounding area.
Inner Mongolia Junzheng: 70,90%, SG-55, 900, 5800 – 100; Delivery under acceptance terms in the surrounding area.
Ordos Chlor-Alkali: 40,90%, SG-56, 500, 5850 – 650; Delivery under acceptance terms in the surrounding area.
Inner Mongolia Sea Level: 40,50%, SG-56, 350, 5850 – 500; Delivery under acceptance terms in the surrounding area.
Inner Mongolia Yihua: 30,80%, SG-56, 250, 5850 – 400; Delivery under acceptance terms in the surrounding area.
Inner Mongolia Yidong: 30,80%, SG-56, 300, 5850 – 450; Delivery under acceptance terms in the surrounding area.
Yinglite: 22,60%, SG-55, 900, 5800 – 100; Delivery under acceptance terms in the surrounding area.
Heilongjiang Haohua: 30,50%, SG-56, 000, 5800 – 200; Delivery under acceptance terms in the surrounding area.
Fangda Jinhua: 69,0%, SG-56, 300, 6100 – 200; Delivery under acceptance terms in the surrounding area.
International Crude Oil Market: This week, international oil prices showed an upward trend, with six consecutive increases, marking the longest streak of increases so far this year. Recently, there have been more positive developments in the crude oil market. On one hand, there are growing calls for an extension of the production cut agreement; in particular, Saudi Arabia has expressed a desire to extend it by six months, which has significantly pushed up oil prices ； On the other hand, the **attacks** carried out by the United States against Syria, coupled with disruptions in crude oil supplies from Libya, pushed oil prices further up. However, as the weekend approached, U.S. crude oil production continued to rise, putting an end to the upward trend in oil prices. As of April 12, WTI crude oil futures for May were trading at $53.11 per barrel, while Brent crude oil futures for June were at $55.86 per barrel. Figure 7: International oil price trend chart (taken from China Chemical Products Network)