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Multiple positive factors support further increases in PVC prices. September 19, 2016. I. Market overview: On September 16, U.S. WTI crude oil closed down 0.88% on Friday, at $43.03 per barrel, while Brent crude oil futures for November dropped 0.82%, ending at $45.77 per barrel. Today, domestic PVC market prices continued to rise, with futures PVC prices soaring significantly. Coupled with ongoing shortages of physical goods in the market, there was a strong tendency among market participants to drive up prices; as a result, manufacturers raised their ex-plant prices substantially, and some products were even taken off the market due to limited availability. Market traders are selling in limited quantities at rising prices, with a strong bullish atmosphere. The market is expected to remain bullish tomorrow as well. II. Upstream raw materials: On September 16, the price of ethylene in Asia dropped by $5 per ton; the price was 1184.5–1186.5 dollars per ton CFR Northeast Asia, and 1054.5–1056.5 dollars per ton CFR Southeast Asia. The supply of calcium carbide is tight, there is a shortage of vehicles for transporting it, and the production costs of calcium carbide are rising steadily. Companies are inclined to sell higher-end products, leading to continuously increasing prices at the point of export. Local calcium carbide ex-factory prices: 2400–2500 in Wuhai and Ordos areas of Inner Mongolia ； 2400-2450 in the Shizuishan area of Ningxia ； Zhongwei region 2500-2550 ； Shaanxi region 2350-2450 ； Gansu region: 2500-2550. III. Industry updates: PVC manufacturers using the electric arc furnace method are holding prices when selling their products. Type 5 ordinary calcium carbide material: the mainstream ex-factory price in the areas surrounding Inner Mongolia is 5,850–5,900 yuan per ton ； The mainstream acceptance price in Shandong region is 6,300–6,400 yuan per ton at the factory exit ； The mainstream ex-factory price in Hebei region is around 6,150 yuan per ton on credit ； In the Shanxi region, the mainstream ex-factory price is 6,100–6,150 yuan per ton, payable upon acceptance. Overall, domestic PVC manufacturers using the ethylene process are currently mostly operating at a stable level. Currently, in the North China region, Qilu Petrochemical, Tianjin Dagu, and LG Dagu sell their products at 5,900–6,000 yuan per ton ex-plant. In the East China region, the price upon delivery is 6,200–6,300 yuan per ton. Formosa Plastics in Taiwan has quoted a price of 850 US dollars per ton CFR the main ports in China for September. IV. Market Trends: Quotations for the domestic mainstream PVC market. Unit: yuan/ton. Product models: East China – price change; South China – price change; North China – price change; Northwest China – price change. Calcium carbide material SG-5: 43,000–6,500 +80; 64,800–6,580 +70; 62,000–6,300 +50; 58,500–5,900 +50. Ethylene-based material: 10,000; 6,800–6,900 +100; 6,850–6,950 +150; 6,600–6,700 +100. For ordinary Type 5 calcium carbide material in East China, the prevailing quotation is 6,350–6,500 yuan/ton; Yusheng’s price is 6,370 yuan/ton, Dongxing’s Type 5 material costs 6,370 yuan/ton, Tianhu’s price is 6,390 yuan/ton, Yili’s Type 5 material costs 6,480 yuan/ton, Tianhu’s Type 3 material costs 6,570 yuan/ton, Jinyu Yuan’s Type 5 material costs 6,370 yuan/ton, Tianchen Tianneng’s Type 5 material costs 6,470 yuan/ton, and Zhongtai Beiyuan’s price is 6,500 yuan/ton ； Ethylene material is available at 6,750–6,900 yuan per ton; the final price can be negotiated. In the North China PVC market, at Qilu Chemical Industry City, the price of Qilu S700 is 6,820 yuan per ton, while the price of S1000 is 6,630 yuan per ton, with delivery available upon pickup. Calcium carbide is delivered at 6,210–6,230 yuan per ton. Delivered in the Linyi area at around 6,300 yuan per ton. In Hebei, it can be picked up at around 6,300 yuan per ton. Pickup from warehouse in Tianjin area at around 6,250 yuan per ton. The mainstream price for Type 5 calcium carbide process PVC in the South China market is 6,400–6,500 yuan per ton ； Ordos: 6,450 yuan per ton; Ely and Zhongtai: 6,480 yuan per ton; Junzheng’s new factory: 6,480 yuan per ton; Dongfang Hope: 6,470 yuan per ton ； 6,390 yuan/ton in Nan Gang, Ili; 6,420 yuan/ton at Sanlian ； Tianye, Tianchen, and Tianneng cost 6,650–6,700 yuan per ton; Dagu 1000/800/700 is priced at 6,780 yuan per ton, while Dagu 1300 model costs 7,000 yuan per ton. V. Transaction Review: Today, the PVC market at the Plastics Exchange continued to show positive trends, with prices in all regions closing on an upward note. In September and October, trading volume of Type 5 PVC in South China increased significantly, and settlement prices rose sharply, driving upward trends in other regions as well ； By the close, the settlement price for September 5th in South China was 6,402 yuan per ton (the same unit is used thereafter), an increase of 52 yuan ； The settlement price in East China is 6,420 yuan, up by 120 yuan ； The settlement price in North China is 6,309 yuan, up by 189 yuan ； The settlement price for the ethylene method is 6,700 yuan, an increase of 50 yuan. Fundamentals: Today, domestic PVC market prices continued to rise, with futures PVC prices seeing a significant increase. Coupled with ongoing shortages of physical goods in the market, there was a strong tendency among market participants to drive up prices; manufacturers raised their ex-plant prices substantially, and some products were even taken off the market due to limited availability. Market traders are selling in limited quantities at rising prices, with a strong bullish atmosphere. The market is expected to remain bullish tomorrow as well. VI. Future Outlook: The recent rapid growth in the PVC spot market is primarily the result of various factors at play in the market. For example: increased raw material costs due to rising coal prices, substantial rises in the logistics costs of products resulting from new transportation regulations, and tight supply conditions caused by maintenance activities in PVC manufacturers, among others. Positive support will continue in the short term, and the PVC market is still likely to see further increases. (Excerpted from China Chemical Products Network)