Rising raw material prices help PVC stop falling and stabilize

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Rising raw material prices help PVC stop falling and stabilize. August 5, 2015, China Chemical Products Network. I. Market overview: The price of U.S. WTI crude oil futures for September rose by $0.57, or 1.26%, to $45.74 per barrel. ICE Brent crude oil futures closed higher by $0.47, or 0.95%, at $49.99 per barrel. After continuous declines, crude oil began to rebound. Driven by these factors, PVC quotes saw an increase in forward prices, which helped stabilize spot prices; however, due to lack of market confidence, overall shipment volumes remained low. II. Upstream raw materials: The Asian ethylene market declined again on Tuesday, remaining under downward pressure as a whole. CFR Northeast Asia dropped by $19 per ton, ending at $1,099.5–$1,101.5 per ton, while CFR Southeast Asia fell by $20 per ton, ending at $1,019.5–$1,021.5 per ton. Affected by the recent weakness in prices of upstream raw materials and downstream derivatives, coupled with an ample supply, the ethylene market has faced few positive factors, causing prices to drop to low levels. Calcium carbide continues to see price increases due to a shortage in supply, as there are limited transport vehicles available at the moment. The price of calcium carbide at consumers’ doors in various regions is: 2,710 yuan per ton in Shandong and Tianjin ； Tangshan, Hebei: 2,590–2,740 yuan/ton ； Around 2,250 yuan per ton in Henan ； Pickup in Yushui, Shanxi: 2360 yuan/ton ； The price for goods sourced from Inner Mongolia in Shaanxi is 2400 yuan per ton; the price for goods from Ningxia is also 2400 yuan per ton. The price for locally sourced goods in Shaanxi ranges from 2310 to 2350 yuan per ton. . III. Corporate Updates: Prices offered by domestic PVC manufacturers that use the calcium carbide process remain stable for now. As upstream raw material costs have risen and crude oil prices have recovered, these manufacturers have stopped cutting prices, with a cautious attitude prevailing in the market. Type 5 ordinary calcium carbide material: the prevailing ex-factory price in the areas surrounding Inner Mongolia is 5,100–5,200 yuan per ton ； The mainstream acceptance price in Shandong region is 5,400–5,500 yuan per ton at the factory exit ； The mainstream ex-factory price in Hebei region is 5,230–5,400 yuan per ton upon acceptance ； In the Shanxi region, the mainstream ex-factory price is 5,300–5,400 yuan per ton, payable upon acceptance. PVC producers using the ethylene process maintain stable prices; Formosa Plastics in Ningbo offers prices ranging from 5,900 to 6,000. Taizhou Liancheng’s quote is 5,900–5,950, with a price of 850 in US dollars. Formosa Plastics’ price for August is $860 per ton CFR the main port in China. Delivery available in the area around Hanhua Ningbo 5850-5950. Suzhou Huasu 5900-6000 in cash. IV. Market Trends: Domestic PVC market price quotes. Unit: yuan/ton. Product, Model, East China, Price change, South China, Price change, North China, Price change. Calcium carbide-based material, SG-5: 5250-5350, -20; 5320-5400, -20; 5280-5320, +50. Ethylene-based material: 1000, 5750-5850, 0; 5720-5750, -30; 5530-5660, 0. The prevailing price in the East China PVC market is 5250-5350. Changzhou Yihua 5270, Shengxiong 5290, Junzheng and Innotech 5300-5320. Shanghai Tianneng Type 5: 5290, Type 8: 5540. Hangzhou Zhongtai 5350, Sanlian 5250 for pick-up, Tianchen Type 5 5340-5370, Type 8 5590-5610. Ethylene material: 5750-5850. In the North China PVC market, at Qilu Chemical City, the price for Qilu S700 is 5700; the price for 1000 units is 5560, with pickup available in person. Calcium carbide material 5280-5320 has been delivered. Delivered to the Linyi area between 5280-5330. Hebei 5230-5270 delivered. Pickup available at warehouse 5270-5300 in Tianjin area; for various models of Tianjin Dagu and LG, pickup is available at 5530-5700. The mainstream PVC price in South China is 5320–5400 for Type 5; Beiyuan’s price is 5380, Zhongtai’s price is reported at 5390, Yihua’s price is 5340, Junzheng’s price is 5380, Yanhu’s price is 5340, Dongxing’s price is 5400, Tianhu’s price is 5380, Shengxiong’s price is 5320, E’erong’s price is 5430, Tieneng/Tianchen’s price is 5400, and Sanlian’s price is 5320. Dagu 1000 is at 5720. V. Trading Conditions: Affected by the weak performance in the spot market, the main contract for PVC continued to decline; by the end of trading, the price for the August delivery, produced by the calcium carbide method in South China, was 5380, a decrease of 80 ； East China closed at 5,340, down 10; South China closed at 5,541 in September, up 81. The ethylene method closed at 5,760, up 10. The current spot market for PVC is performing poorly; raw material prices are high, and the operating rates of enterprises are generally low. Driven by costs, factory prices show resilience against declines, but downstream companies lack the willingness to make purchases, making it difficult for market prices to rebound. It is expected that PVC prices will remain weak in the short term. On a macro level, the special financial bonds issued by policy banks will become a new tool to drive local infrastructure investment. The China Development Bank and the Agricultural Development Bank issued special construction bonds to the Postal Savings Bank; the central government provided interest subsidies equal to 90% of the value of these bonds, which were used for funding projects, making equity investments, and participating in funds managed by local investment and financing companies. It is clear that the central government’s support for the economy is now in full swing. With such policy support, industries related to raw material production will benefit, which in turn will have a positive impact on PVC prices in the long term. VI. Market Outlook: The domestic PVC market remains relatively stable with only slight fluctuations, and there are occasional declines. This is mainly due to the continuous rise in calcium carbide prices, along with the recovery in crude oil prices which has eased market fears. The overall increase in raw material costs has also helped stabilize prices at the upstream level. The market hopes that rising costs will provide support for PVC prices; however, weak demand on the downstream side makes it difficult to sell products, and low-grade PVC in various markets continues to reach new lows. The market is expected to remain in a weak consolidation phase for now, and the trend of raw materials will need to be monitored going forward.