The operating load of PVC enterprises increased, the inventory was higher than that in the same period of previous years, the downstream orders were limited, the supply and demand pattern deteriorated, and the price continued to weaken, so as to accelerate the demand for destocking. However, there is uncertainty in calcium carbide supply in winter, which adds uncertainty to the trend of PVC. Therefore, we are cautious and bearish on PVC.
Policy force, calcium carbide falling space is limited
Since August, there has been a serious shortage of power supply in China. In order to ensure civil power supply, some regions have begun to implement the control measures of dual control of energy consumption, which has a great impact on calcium carbide production with large power demand. The starting load of domestic calcium carbide production enterprises has decreased, the price of calcium carbide has continued to rise, and the arrival price in East China once rose to 8200 yuan / ton, Doubled from the beginning of the year. The sharp rise in costs is an important reason for the continuous rise of PVC futures prices in the first three quarters. In mid October, the government issued a strict coal supply guarantee policy, which alleviated the shortage of domestic power supply, greatly reduced the price of calcium carbide, and greatly reduced the price of PVC futures.
At present, the domestic calcium carbide price is still weak, but it should not be too pessimistic for the future market. First, the domestic power consumption is large in winter, so the implementation of the dual control policy of energy consumption in Northwest China still needs to be further observed; Secondly, the transportation in Northwest China is inconvenient in winter, which may lead to the structural and phased shortage of calcium carbide in East China; Third, with the opening of the Winter Olympic Games, there is an expectation of upgrading the environmental protection and safety inspection in the northwest region. In this case, we believe that there is limited room for calcium carbide prices to fall in the short term, and the cost will support PVC.
High inventory and high PVC supply pressure
At present, the domestic PVC production cost is relatively stable, but with the continuous decline of PVC spot price, the production and operation status of PVC production enterprises continues to deteriorate. As of December 9, the production costs of domestic calcium carbide process and ethylene process PVC were 8800 yuan / ton and 9500 yuan / ton respectively. Domestic calcium carbide PVC production enterprises have a loss of 106 yuan per ton; The production enterprises of Vinyl PVC (VCM) lose 100 yuan per ton. At present, although the PVC production enterprises are in a state of loss, the loss is in an acceptable range, so the operating load of PVC production enterprises has not decreased significantly.
At present, PVC is in the destocking cycle, but the supply and demand pattern has not improved significantly, and the destocking process is relatively slow. The supply pressure of domestic PVC has not weakened due to the deterioration of the operating conditions of production enterprises. The market supply is abundant, and the inventory is significantly higher than that in the same period last year.
In the off-season of consumption, downstream enterprises have fewer orders
In winter, PVC downstream profiles and pipes enter the seasonal consumption off-season. At present, domestic PVC downstream products enterprises are in a state of low profit, but due to limited orders, the overall operating load shows a downward trend. In the future, the demand for PVC is difficult to improve. On the one hand, as the weather turns cold and the demand in the North continues to decline, most profile enterprises maintain the established inventory and adopt the procurement strategy of just replenishing the inventory, with limited new orders. On the other hand, at present, the market is pessimistic about the future market. Driven by the sentiment of buying up but not buying down, the downstream replenishment is not positive.
At present, the supply and demand pattern of PVC is weak. The operating load of enterprises is maintained at a relatively high level, the social inventory is high, and the market supply is sufficient. However, due to the seasonal influence, downstream enterprises are not active in procurement, so it is difficult to accelerate the process of PVC destocking, which has a strong suppression on PVC prices, which is also the leading logic at present. However, from the cost side, the policy and winter transportation problems add more uncertainty to the supply of calcium carbide in the later stage. It is not appropriate to be too pessimistic about the price of calcium carbide. The drag of the cost side on PVC is not only gradually relieved, but also does not rule out the occurrence of supporting PVC in the later stage. Based on the above factors, we are cautiously bearish on PVC prices.
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