Last week, with the release of several news on the policy side (reducing the down payment ratio for buying a house, lowering the interest rate on provident fund loans, canceling the lower limit of commercial loan interest rates, etc.), PVC also ushered in its highlight moment of the year! PVC futures closed up 2 points for several consecutive days, closing at 6383 as of May 20, up 2.64% from the previous trading day. So with the vigorous release of macro news, can the PVC market continue to rise in the later period? Let’s take a brief look at the facts!
Calcium carbide may rise or enter the end, and the cost side will support or weaken
The rise of raw material blue charcoal in the early stage gave strong support to calcium carbide, coupled with the centralized maintenance of calcium carbide production enterprises in May, superimposed on the power rationing in Inner Mongolia and other factors, the start was unstable, the supply continued to shrink, and the price of calcium carbide rose. At present, since May, some PVC, BDO and other devices have been overhauled and landed, the demand side of calcium carbide support weakened, after the supply and demand game, the calcium carbide market has entered a state of finishing, calcium carbide PVC cost or little change, firm. The ethylene method is affected by the price of ethylene and temporarily supports stability.
The overhaul is more concentrated, and the output is reduced
As of May 17, the capacity utilization rate of PVC production enterprises was 78.55%, down 3.95% from last week and up 6.48% year-on-year; Among them, the calcium carbide method decreased by 4.94% month-on-month and increased by 7.57% year-on-year at 77.51%, and the ethylene method decreased by 1.06% month-on-month and increased by 2.24% year-on-year at 81.60%. As PVC manufacturers such as Yangmei Hengtong, Jin Yuyuan, Shengxiong, and Xinjiang Tianye are still under maintenance, it is expected that the capacity utilization rate of enterprises will continue to decline, and the output will also decrease.
Demand is sluggish and inventory digestion is slow
As of May 17, the social inventory of PVC was 599,600 tons, an increase of 0.15% month-on-month and a year-on-year increase of 23.49%. From the perspective of domestic demand, as the futures market continues to rebound, the arbitrage spread between futures and spot continues to expand, which stimulates the enthusiasm of trading enterprises to sign orders, but the downstream terminal enterprises have limited start-up improvement, and the price of PVC has risen, which has hit the enthusiasm of downstream stocking. At present, domestic demand is still sluggish, the hard products industry represented by pipe profiles is still weak, and the soft products are relatively good, maintaining at 5-8 percent. From the perspective of external demand, foreign trade exports are affected by the continuous rise in sea freight and the advent of the forward monsoon off-season, and the market is cautious in taking goods, and prices are deadlocked.
To sum up, in the short term, the PVC market will maintain a high and strong trend under the strong macro stimulus and the impact of the supply side contraction, coupled with the support of the cost side. In the long run, PVC still has to return to fundamentals, and the policy stimulus to de-inventory and destocking is difficult to bring benefits to new starts, and although the housing market has been boosted, the demand for building materials market remains to be seen. Judging from the current maintenance, there are not many planned maintenance in June, and the new production capacity of Zhenyang in Zhejiang and Jintai in Shaanxi is planned to be put into operation, and the supply side is difficult to find, while the performance of demand forward orders is insufficient, which has a certain drag on the market, and the supply and demand in foreign markets are weak due to maintenance and off-season constraints. It is generally expected that the short-term PVC market will remain firm due to the slight improvement in fundamentals and the stimulation of macro policies, and the medium and long-term prices may have the risk of falling. …
