Weak demand drives the PVC market lower continuously

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Weak demand continues to drive the PVC market downward. June 12, 2015, China Chemical Products Network. I. Market overview for this week: This week, prices in China’s PVC market continued to fall, with decreases of around 50–100 yuan per ton compared to last week. The main reason for this was the drop in export prices offered by PVC manufacturers at the production level, which removed cost support from the market. Additionally, demand from downstream sectors was weak, and most traders were pessimistic about future trends, leading to further price declines. As of the end of the week, there were no positive factors to support the market, and it continued to decline. Currently, the average price for calcium carbide used in PVC production is around 5650–5800 yuan per ton. II. Manufacturer updates: This week, the pricing of PVC products by manufacturers continued to decline. The price of calcium carbide in the upstream sector showed no improvement, which reduced the costs for PVC manufacturers. Additionally, companies that had been under maintenance resumed production one after another, leading to an increase in supply. However, there was no improvement on the demand side. In the north, it is the wheat harvesting season, resulting in reduced operational activity at end-users and weaker demand; as a result, manufacturers are lowering their selling prices in order to reduce their inventory levels. Type 5 ordinary calcium carbide material: the mainstream price at manufacturers in the surrounding areas of Inner Mongolia is 5,600–5,700 yuan per ton ； The mainstream acceptance price in Shandong region is 5,700–5,800 yuan per ton at the factory exit ； The mainstream ex-factory price in Hebei region is 5,650–5,750 yuan per ton on credit ； The prevailing ex-factory price in Shanxi region is 5,600–5,700 yuan per ton in cash. The quotes for ethylene material have also dropped; the standard ex-plant price in North China is 5,900–6,050 yuan in cash terms, while in East China it is 6,200–6,400 yuan per ton. III. Upstream raw materials: The Asian ethylene market saw a slight increase this week; as of Thursday, the price was 1419.5–1421.5 dollars per ton for CFR Northeast Asia, and 1429.5–1431.5 dollars per ton for CFR Southeast Asia. Although the market currently faces a tight supply of goods, demand remains weak and trading activity is sluggish; only some downstream manufacturers of high-priced ethylene derivatives purchase raw materials in moderate quantities, while most factories are waiting and observing the situation. On the downstream side, a fire broke out on Wednesday at the PE plant of Malaysia Titan in Guandu, Brazil, but the plant was not affected; it had just completed a week-long annual maintenance and was scheduled to restart this weekend. This week, the price of calcium carbide continued to fall. PVC manufacturers across the country had large quantities of calcium carbide awaiting unloading, so they had no choice but to continue reducing prices in order to control the inflow of this material. The ex-factory price of calcium carbide is also declining, with more transactions at lower prices, putting significant pressure on companies regarding sales and costs. Moreover, there is still a large inventory of calcium carbide from previous periods, so the imbalance between supply and demand in the market remains evident. Even as some calcium carbide production plants have stopped operating, this has not been able to stop the continued decline in calcium carbide prices. IV. Maintenance statistics for domestic enterprises: Baotou Sea Level stopped operations for maintenance on February 5; the restart date is still uncertain. Xinjiang Tianye began scheduled maintenance on mid-April, and it has not yet been completed. Inner Mongolia Yidong will be shut down for a week starting June 3, with restart expected on the evening of June 8. Shaanxi Jintai started maintenance around May 24, with restart planned for June 11. Siping Haohua temporarily halted operations on April 10; the restart date has not been determined yet. Tangshan Sanyou began scheduled maintenance on May 25, with resumption of operations planned for June 7. Inner Mongolia Junzheng will shut down the 320,000-ton production facility at its old plant on June 10, with restart planned for the 17th. Shaanxi Beiyuan will carry out comprehensive maintenance from June 26 to July 5; operations will be gradually resumed from July 6 to 10 at half capacity, with all maintenance tasks completed by July 15. Inner Mongolia Junzheng plans to carry out maintenance on the 320,000-ton production facility at its new plant in August. Inner Mongolia Ely also has maintenance plans at the end of June.

V. Market outlook: The domestic PVC market is expected to continue declining this week. As upstream costs keep falling, companies are lowering their prices accordingly. The market lacks positive factors supporting it, and traders lack confidence, so they continue to reduce prices in an attempt to sell their products. Demand from downstream sectors has not improved, resulting in weak market activity. The downward trend in PVC prices is expected to continue in the short term.