Limited supply in the market drives a slight increase in PVC prices

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Limited supply in the market supports a slight increase in PVC prices. October 9, 2016 (from China Chemical Products Network) I. Market overview On October 7, U.S. WTI crude oil futures for November closed down 0.63% to $49.81 per barrel. December futures for Brent crude fell by 0.58 to $51.93 per barrel. Today, the domestic PVC market performed moderately; both market and manufacturer inventory levels remain low, and the provisional pricing offered by upstream manufacturers is generally stable ； Market traders have limited stock and are holding prices high; small increases are still seen for some in-demand grades. Downstream product manufacturers are highly cautious and moving slowly to respond, so it is expected that the PVC market will remain stable and consolidate its levels tomorrow. II. Upstream raw materials: On October 7, prices of ethylene in Asia declined slightly; the CFR price for Northeast Asia dropped by 10 to settle at 1,089.5–1,091.5 dollars per ton, while the CFR price for Southeast Asia was 1,039.5–1,041.5 dollars per ton. The price of calcium carbide remained stable; companies had limited inventory, shipments were steady, and there were minimal adjustments to the ex-factory prices. Local calcium carbide ex-factory prices: 2,400–2,500 yuan/ton in Wuhai and Ordos areas of Inner Mongolia ； 2,400–2,450 yuan/ton in the Shizuishan area of Ningxia ； Zhongwei region: 2,500–2,550 yuan/ton ； 2,400–2,500 yuan/ton in the Shaanxi region ； In Gansu region, it is 2,500–2,600 yuan per ton. III. Industry updates: PVC producers using the electrochemical calcium carbide method are selling at higher prices. Type 5 ordinary calcium carbide material: the mainstream ex-factory price in the areas surrounding Inner Mongolia is 6,250–6,400 yuan per ton ； The mainstream acceptance price in Shandong region is 6,450–6,600 yuan per ton at the factory exit ； The mainstream ex-factory price in Hebei region is around 6,450 yuan per ton on credit ； In the Shanxi region, the standard ex-factory price is 6,600–6,750 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, the price at the factory for products from Qilu Petrochemical, Tianjin Dagu, and LG Dagu is 6,800–7,000 yuan per ton. In the East China region, the delivery price is 6,900–7,000 yuan per ton. For Formosa Plastics in Taiwan, the quote for October is 890 US dollars per ton CFR the main ports in China. IV. Market Trends
Domestic mainstream PVC market quotation table
Unit: RMB/ton

| Product Model | East China | Change | South China | Change | North China | Change | Northwest China | Change |
|---------------|-----------|--------|-------------|--------|-------------|--------|-----------------|--------|
| Calcium carbide-based material SG-5 | 6,850–6,980 | — | 6,950–7,030 | +70 | 6,650–6,800 | — | 6,250–6,400 | — |
| Ethylene-based material | 10,007 | 1,150–1,725 | +50 | 7,200–7,300 | +50 | 6,900–7,000 | +50 | — | — |

In East China, the prevailing price for ordinary Type 5 calcium carbide-based PVC material is 6,850–6,900 RMB/ton. The price for Zhongtai’s Type 5 material is 6,920 RMB/ton; Beiyuan’s is 6,900 RMB/ton; Dongxing’s is 6,840 RMB/ton; Yushe’s is 6,850 RMB/ton; Hubei Yihua’s is 6,870 RMB/ton; Wuxi Yanhu’s is 6,880 RMB/ton; while Tianchen Tianneng’s Type 5 material is priced at 6,950 RMB/ton ； Qilu material S1000 is priced at 7,050 yuan per ton ex-warehouse, while S700 is priced at 7,200 yuan per ton. In the North China PVC market, at Qilu Chemical Industry City, the price of Qilu S700 is 7,200 yuan per ton, while the price of S1000 is 7,150 yuan per ton, with pickup available on-site. Calcium carbide is delivered at around 6,530–6,570 yuan per ton. It is delivered in the Linyi area at around 6,720 yuan per ton. In Hebei, it can be picked up at around 6,630 yuan per ton. Pickup from warehouse in Tianjin area at around 6,670 yuan per ton. In the South China PVC market, the prevailing quotes for Type 5 PVC produced via the calcium carbide method are 6,750–6,850 yuan per ton ； Junzheng new factory: 6,870 yuan/ton ； Yili: 6,880 yuan per ton; Salt Lake: 6,820 yuan per ton ； Tianhu: 6,900 yuan per ton ； Tianchen, Tianneng: 6,950 yuan/ton ； Tianye Type 3: 7,150 yuan per ton ； Tianchen Type 8: 7,050 yuan per ton ； Dagu 1000 is out of stock; the price for 700/800 is 7,150 yuan per ton ； 1300 is quoted at 7,250 yuan per ton. V. Transaction Review: Today, the PVC market on the Plastics Exchange saw fluctuating consolidation. Contract prices varied across different regions, with both increases and decreases observed ； During trading, most dealers adopted a wait-and-see attitude with few taking trading actions, resulting in weak trading activity across all areas ； By the close, the South China settlement price for October was 6,900 yuan, a decrease of 100 yuan ； The settlement price in East China is 6,970 yuan, a decrease of 10 yuan ； The settlement price in North China is 6,760 yuan, up by 10 yuan ； The settlement price for the ethylene method is 7,110 yuan, an increase of 10 yuan. Fundamentals: The domestic PVC market performed moderately today; both market and manufacturer inventory levels remain low, while the pricing offered by upstream manufacturers remains relatively stable for now ； Market traders have limited stock and are holding prices high; small increases are still seen for some in-demand grades. Downstream product manufacturers are highly cautious and reacting slowly; it is expected that the PVC market will remain stable and consolidate tomorrow. VI. Future outlook: At present, the central environmental protection team stationed in Shandong has not carried out any further inspections of PVC manufacturers. The supply of PVC in domestic markets remains limited, and market inventory levels stay low. Traders are reluctant to sell their products, and prices for certain grades have seen a slight increase ； It is expected that PVC prices will remain strong tomorrow as well ； However, it is still necessary to pay close attention to the impacts of environmental protection, as well as those resulting from the trends in PVC prices in the futures market.