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Strong market performance drives further decline in PVC prices November 30, 2016 I. Market overview On November 29, U.S. WTI crude oil January futures fell by 3.93%, closing at $45.23 per barrel. January futures for Brent crude fell by 1.86%, to $46.38 per barrel. Today, the domestic PVC market continued to decline. Demand from downstream manufacturers was moderate, sellers had difficulty selling their stock, transactions in the market were sluggish, and traders continued to lower their quotes ； Orders from upstream manufacturers are generally steady, but some prior orders are currently being delivered; therefore, the pricing will not be adjusted for now. It is expected that the market trend will remain downward tomorrow as well. II. Upstream raw materials: On November 29, ethylene prices in Asia remained stable. Northeast Asian ethylene closed at $1,039.5–$1,041.5 per ton, while CFR Southeast Asia was at $899.5–$901.5 per ton. The ex-factory prices of calcium carbide enterprises vary; the differences are significant depending on the downstream markets and regions to which it is sold. The operation of calcium carbide furnaces in Shaanxi and Gansu remains unchanged. Local calcium carbide ex-factory prices: 2,600–2,650 yuan/ton in Wuhai and Ordos areas of Inner Mongolia ； 2,600–2,650 yuan/ton in the Shizuishan area of Ningxia ； Zhongwei region: 2,650–2,700 yuan/ton ； 2,600–2,650 yuan/ton in the Shaanxi region ； In Gansu region, it is 2,600–2,800 yuan per ton. 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 7,100–7,200 yuan per ton ； The mainstream acceptance price in Shandong region is 7,500–7,600 yuan per ton at the factory exit ； The mainstream ex-factory price in Hebei region is around 7,350 yuan per ton upon acceptance ； In the Shanxi region, the standard ex-plant price is 7,300 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 7,600–7,700 yuan per ton. In the East China region, the delivery price is 7,900–8,000 yuan per ton. Taiwan’s Formosa Plastics has quoted a price of 930 US dollars per ton CFR the main ports in China for November. IV. Market Trends: Domestic PVC market price quotes. Unit: yuan/ton. Product type, East China price change, South China price change, North China price change, Northwest China price change. Calcium carbide-based material: SG-575 – 30,768 – 20,080; 30,818 – 50,740; 00 – 7,500 – 150; 710 – 7,200 – 100. Ethylene-based material: 10,008; 3,000 – 8,400 – 50; 8,350 – 8,450 – 50; 8,000 – 8,100 – 50. The prevailing price in the East China PVC market is 7,550 – 7,850 yuan/ton. In the Hangzhou area, Tianye and Beiyuan Model 5 costs 7,650–7,750 yuan per ton; Beiyuan and Tianye Model 8 cost 7,750 yuan per ton; Zhongtai Model 5 costs 7,700 yuan per ton; Dongfang Hope costs 7,700 yuan per ton; and Yinglite Model 5 also costs 7,700 yuan per ton. In the Jiangsu region, Yingteli Type 5 costs 7,700 yuan per ton, while Beiyuan Type 5 also costs 7,700 yuan per ton. Ethylene material: 8,400–8,500 yuan per ton. In the North China PVC market, at Qilu Chemical Industry City, the price of Qilu S700 is 8,730 yuan per ton, while the price of S1000 is 8,530 yuan per ton, with delivery available upon pickup. Calcium carbide is delivered at around 7,670–7,700 yuan per ton. Delivered in the Linyi area at around 804 yuan per ton. In Hebei, it can be picked up at around 7,830 yuan per ton. Pickup from warehouse in Tianjin area at around 7,830 yuan per ton. The mainstream price for Type 5 calcium carbide process PVC in the South China market is 8,100–8,200 yuan per ton ； Tianneng, Hengtong, Yili, Junzheng’s old factories, and Tianhu: 8150 yuan per ton; Xinfaa and Dongfang Hope: 8130 yuan per ton; Dongxing: 8080 yuan per ton; Yanhu, Jinhua, and Shenghua: 8070 yuan per ton; Sanlian: 8050 yuan per ton; Tianhu: 8050 yuan per ton ； Beiyuan: 8,250 yuan per ton ； Dagu 1000/700/800 is priced at 8,400 yuan per ton, while Dagu 1300 is priced at 8,450 yuan per ton. V. Transaction Review: Today, the PVC market on the Plastic Exchange showed limited price fluctuations. Real estate sector faced regulatory measures, while prices of commodities in the iron and steel category as well as building materials dropped sharply, which prompted caution among traders on the Plastic Exchange; thus, trading was cautious across various regions with relatively low transaction volumes ； By the close, the South China settlement price for December was 8,210 yuan per ton (the same unit applies below), an increase of 10 yuan ； The settlement price in East China is 7,850 yuan, a decrease of 50 yuan ； The settlement price in North China is 7,630 yuan, a decrease of 20 yuan ； The settlement price in the northwest is 7,230 yuan, a decrease of 20 yuan ； The settlement price for the ethylene method is 8,300 yuan, a decrease of 20 yuan. Fundamentally: Today, the domestic PVC market continued to decline. Demand from downstream manufacturers was average, sellers had difficulty selling their stock, and market transactions remained sluggish; traders continued to lower their quotes ； Orders from upstream manufacturers are generally steady, but some prior orders are currently being delivered; therefore, the pricing will not be adjusted for now. The market is expected to remain in a downward trend tomorrow as well. VI. Future market forecast: Based on the analysis of today’s situation, the domestic PVC market is expected to continue to decline. Previously, the industry expected that PVC prices would rise too rapidly, so a pullback was within expectations. Currently, as there is financial regulation of overall commodities through futures and similar mechanisms, PVC futures are also seeing continuous and significant price drops. In the spot market, suppliers are under increasing pressure to ship goods, but PVC manufacturers, relying on their customers from the previous order periods, remain relatively calm. It is expected that the PVC market will remain downward-oriented tomorrow as well. (Excerpt from China Chemical Products Network)