The chlor-alkali market is recovering

Five factors drove domestic PVC prices to their highest levels of the year (excerpt from China Chlor-Alkali Network, 10-11-2010). In September, the domestic PVC market entered a period of rapid upward momentum; both PVC produced via the calcium carbide method and that produced via the ethylene method saw their prices rise to annual highs due to factors such as rising costs of raw materials, lower production rates by manufacturers, limited supply in the market, and a slight recovery in demand. From early to late September, the average price of PVC in China increased by 700–770 yuan per ton, while in key consumption areas in the south the increase was as high as 800–950 yuan per ton. The main factors driving the rise in the PVC market are as follows: First, domestic PVC prices have risen sharply, successfully breaking through the 8,000 yuan threshold. Since September, prices in China’s PVC market have seen an increase almost on a daily basis, with each increase typically ranging from 50 to 100 yuan. For example, from the beginning of the month to the 26th, the pick-up price for type 5 calcium carbide-based material in the East China region rose from 7,330–7,400 yuan to 8,200–8,300 yuan, while in the South China region it increased from 7,400–7,500 yuan to 8,200–8,300 yuan, showing a significant increase and a rapid pace of rise. The price of PVC produced by the ethylene method also increased; in the East China and South China regions, the market prices rose from 7450–7550 yuan and 7550–7650 yuan respectively to 8250–8300 yuan and 8250–8350 yuan. 　　Secondly, rising prices of domestic calcium carbide raw materials as well as EDC/VCM have supported the continuous increase in PVC costs. In September, due to **energy conservation and emission reduction policies**, supply in major calcium carbide-producing regions such as Inner Mongolia and Ningxia declined significantly, which led to an increase in the price of calcium carbide. In addition, in September, the price of ethylene in Northeast Asia rose to $1,050–$1,060 (CFR), while the price of EDC exported from abroad to China was $520–$530 (CFR), and the price of VCM was $850 (CFR). 　　Thirdly, the shortage of calcium carbide raw materials has led PVC manufacturers to reduce production to varying degrees in order to ease the pressure. Based on practical observations and analyses, PVC manufacturers in Central China, North China, Southwest China, and even Northwest China that rely on imported calcium carbide are facing the pressure of insufficient supply of raw materials, which prevents them from operating properly. Most PVC manufacturers are facing tight inventory levels, which gives them a strong incentive to raise prices. 　　Fourth, the volatility of PVC futures continues to have a significant impact on the spot market. During the trading days from September 1 to 21, domestic PVC futures experienced 4 days of decline, while the closing prices on all other days were positive. Overall, the decline in futures prices during September did not undermine the upward trend in spot PVC prices, with the spot market showing stronger momentum than the futures market. 　　Fifthly, the reduction in the supply of goods in society has further fueled traders’ reluctance to sell and intensified their speculative behavior. Downstream product manufacturers have seen a certain degree of recovery in production activity since September, but at present, as the prices of plastic products have not been able to pass on the pressure of rising costs quickly, these companies are not very enthusiastic about taking on new orders. With favorable external conditions, proactive price increases in the mid- and upper-stream sectors are relatively evident. 　　The PVC market is expected to remain at its high levels from the end of September into October. In the fourth quarter, **the implementation of policies aimed at energy conservation and emission reduction will continue; as a result, the calcium carbide industry, which is closely related to PVC, will still face significant challenges, which in turn will affect the operation of PVC manufacturers. Although it is unrealistic to expect the PVC market to see a significant increase in October, just as it did in September, prices for PVC will remain high due to the current period of demand recovery.

Power rationing is driving up prices of chemical products, with leading companies reaping the benefits. Recently, as a result of policies aimed at reducing energy consumption, power cuts have affected the energy-intensive chemical industry, particularly impacting the phosphate chemicals and PVC sectors. Prices of some chemical products have begun to rise; our analysis is as follows: 1. The average monthly price of yellow phosphorus has increased by 6.6%. Currently, the price of yellow phosphorus is 14,000 yuan per ton, up by 114 yuan per ton compared to last week, and by 858 yuan per ton compared to last month, representing a growth rate of 6.6%； The price of the downstream product sodium tripolyphosphate is 4,630 yuan per ton, up by 140 yuan per ton compared to the prices in May and June, representing a increase of 3.1%. 　　2. The average monthly price of PVC increased by 4.1%. Currently, the price of PVC produced by the calcium carbide method is 7,700 yuan per ton, up by 220 yuan per ton compared to last week and by 290 yuan per ton compared to last month, representing a growth rate of 4.1%. The average monthly and weekly prices of PVC produced by the ethylene method increased by 2.2%, with the increase in the price of PVC produced by the calcium carbide method being greater than that of PVC produced by the ethylene method. 　　3. The reason for the price increase is the decline in product supply: According to the **11th Five-Year Plan**, energy consumption per unit of GDP was to be reduced by about 20% by 2010 compared to 2005, an average annual reduction of 4.4%. In the first half of the year, energy consumption per unit of GDP increased by 0.09% on a year-on-year basis. To achieve the set targets, local authorities face significant challenges in terms of energy conservation and reduction; since the third quarter, measures such as power cuts have been implemented targeting industries with high energy consumption and high pollution levels. Multiple chemical sub-sectors were affected by this, taking measures such as limiting production or shutting down operations, which led to a decrease in product supply; the phosphorus chemicals and chlor-alkali industries were particularly impacted. 　　4. It is expected that yellow phosphorus prices will continue to rise in the fourth quarter, with companies that have a high level of power self-sufficiency benefiting from this trend: 14,000 kWh of electricity is required to produce 1 ton of yellow phosphorus, and electricity costs account for 50% of the total cost of producing it, making it a typical energy-intensive industry. The fourth quarter sees the onset of the dry season, leading to tighter electricity supply. At the same time, **backward production capacity of yellow phosphorus with a capacity of less than 5,000 tons is phased out, resulting in a decrease in the supply of yellow phosphorus. The demand from downstream industries remains stable, so this imbalance between supply and demand will cause prices of yellow phosphorus to continue rising. 　5. The worst times for the chlor-alkali industry may be behind us: 1.4 tons of calcium carbide are required per ton of PVC, and 3,500 kWh of electricity is needed per ton of calcium carbide. Electricity costs account for over 40% of the cost of PVC products; therefore, PVC and calcium carbide are also **high-energy-consuming industries that require special attention in terms of energy consumption control. Recently, enterprises in the main calcium carbide-producing areas in the northwest have adopted a wait-and-see attitude regarding **energy-saving and emission-reduction policies, which has led to a decline in calcium carbide production. In the first eight months of this year, production volume dropped by 10% on an annual basis, with a 23% decrease in August alone. At the same time, transportation of coal, fruits, and agricultural products in the northwest is concentrated, resulting in limited available vehicles and thus tight logistics for transporting calcium carbide. The shortage of calcium carbide supply and rising prices have driven up PVC prices. On the other hand, real estate transaction volumes have been on the rise recently, and since 75% of PVC products are used in the real estate sector, this will inevitably drive up demand for PVC. Therefore, there is support for an increase in PVC prices in the future.

The main reason is power rationing. Many companies have an operating rate of less than 60%. In the first few days, the price of liquid chlorine soared from 1400 to 2300. It then dropped a little

No wonder the chlorine-alkali stock hit its price limit, haha

The chlor-alkali industry, affected by the crisis, has seen a slight improvement

Who has information on the market situation in the chlor-alkali industry in recent years, as well as details on the main manufacturers, production capacities, and price trends! Thank you, my email is ylt-1980@163.com

Energy conservation and emission reduction are the main factors, leading to lower standards for some chlor-alkali plants and production restrictions for calcium carbide manufacturers.

**Meetings were held to ensure that the targets for emission reduction set for the 11th Five-Year Plan were met – a 20% reduction in emissions – and power rationing was implemented. Southern Weekend published an article titled “No interference in the first half of the year, but strict controls in the second half”; those interested can take a look