The price difference of SG-5 in East China will reach 3888 yuan / T, with an average price of 6641 yuan / T, down 0.12% from last year's average price of 6725 yuan / T. In 2020, the profit of PVC industry will continue to increase, and the average profit of PVC enterprises with calcium carbide process in Inner Mongolia will be 723 yuan / ton, with a year-on-year increase of 6.32%.
Looking at the trend of PVC market in 2020, the change of PVC micro supply and demand plays a decisive role in each wave of market, while the macro market plays a role in boosting the flames.
In 2020, the PVC market not only exceeded our expectations, but also showed different performance in terms of social inventory, import and export, downstream demand, etc. Next, we will review the year 2020 through the analysis of PVC memorabilia in 2020, and make a reflection and summary.
1. The price difference range of PVC has reached the biggest in 10 years
In 2020, the price of PVC market presents a deep "V" trend, and the price fluctuates violently. In the first quarter, the high price falls down, and in the second quarter, the low price rises. This rising trend continues to the first ten days of December, and the high price of PVC starts to callback from the middle and last ten days of December.
In the first quarter of 2020, the domestic public health emergencies will have a significant impact on the PVC industry chain, and the demand side will be more affected. The start of demand will be delayed, the short-term supply of PVC market will exceed the demand, and the spot market will be under pressure. In addition, the outbreak of the epidemic in Europe and the United States in March, the US stock market will melt down and the crude oil will plummet, the panic in the financial capital market will intensify, the risk aversion in the macro market will increase, and the bad mood of participants will increase 。 The lowest price of SG-5 in East China dropped to about 5000 yuan / ton, and the price of PVC dropped by 1800 yuan / ton in the first quarter. From the second quarter, with the upstream PVC manufacturers entering the period of centralized maintenance and the demand side of PVC recovering, and speeding up the construction, the social inventory continued to digest, and the fundamentals of PVC improved. This situation continued to the fourth quarter. Coupled with the favorable export and the tight supply situation in the domestic market, PVC rose to a 10-year high in December. However, with the weakening of long-term supply and demand and the decline of futures market, PVC rose and fell in mid February.
2. PVC social inventory reaches a new high
The drastic fluctuation of PVC market in 2020 is basically dominated by the change of PVC supply and demand fundamentals. In the first quarter, the short-term supply of PVC market exceeded the demand. The inventory of warehouses in East and South China reached a new high of 492700 tons in recent years, and most of the warehouses were full. In this state of high inventory, the market mentality is not good, spot traders panic selling, prices continue to decline. With the beginning of the second quarter, the supply and demand fundamentals of PVC gradually improved, and the social inventory gradually digested. Especially at the end of the third quarter, driven by the favorable export, the social inventory of PVC continued to decline, and it was difficult to find one source of marketable goods, which supported the rising price of PVC.
3. The import volume reached a new high this year, which affected the market mentality
In addition to the changes in domestic supply and demand, the special performance of PVC import and export in 2020 also has an important impact on the domestic PVC market.
From May to August, the import volume of PVC increased significantly. As of November, the import volume of PVC powder in China reached 920000 tons. It is estimated that the annual import volume in 2020 will be about 960000 tons, of which the monthly import volume in June will be 172900 tons, reaching the peak in recent years.
Although the supply of imported goods has increased significantly since May, the impact on the market sentiment is ahead of time. Since March, the market has expected a large increase in imports in the later period. With the arrival of goods in the later period, the supply of imported goods has also seized part of the domestic supply market. From the third quarter, the domestic social inventory de stocking has slowed down significantly.
In 2020, the import volume of PVC increased significantly, mainly due to the severe epidemic situation in foreign countries since March, the international crude oil fell to a historical low, and the cost of imported materials decreased significantly. And since March, with the increasingly serious international public health incidents, the weakening of foreign demand, the increasing pressure of foreign PVC supply, the continuous downward trend of international prices, and low-cost exports, at this time, China's PVC market began to recover, prices rebounded higher, China's import arbitrage window opened, and a large number of ocean going goods from Europe and the United States, India, Southeast Asia and other goods poured into the Chinese market.
4. Foreign goods are tight and the price is high, and the export increased greatly in the fourth quarter
In 2020, PVC not only has a bright performance in import, but also plays a phased role in promoting domestic PVC market.
From 2016, the domestic PVC export volume began to decline year by year, but in 2020, the PVC export volume rebounded and increased, mainly because the PVC export volume increased significantly in the fourth quarter of 2020. Throughout the first half of the year, affected by the epidemic, foreign market demand was poor, prices were relatively low, and the export window was closed all the time. However, since the second half of the year, the international market demand has gradually recovered. However, due to the influence of maintenance or force majeure, the operation of some international PVC plants is unstable, the overall international supply is reduced, the supply of foreign markets is tight, and the external price has increased significantly. Since the middle of August, the domestic export arbitrage window has been opened again for a long time, and the export has increased significantly in the fourth quarter Exacerbated the domestic spot tension situation.
In terms of export, another special place is the sharp increase of freight and the shortage of foreign trade containers, which leads to the sharp rise of container shipping price, and the poor turnover of containers, which also limits the export of PVC by the end of 2020 to a certain extent.
The above is about the outstanding performance of PVC market in 2020. In addition, China will conduct anti-dumping and countervailing investigations against the United States in 2020.
On September 25, 2020, the Ministry of Commerce issued announcement No. 40 of 2020, deciding to conduct an anti-dumping investigation on PVC imported from the United States. The investigation should normally be completed before September 25, 2021, and can be extended to March 25, 2022 under special circumstances. The Ministry of Commerce has decided to file a countervailing investigation on imported PVC from the United States from October 14, 2020. The investigation period is from January 1, 2019 to December 31, 2019, and the industrial damage investigation period is from January 1, 2016 to December 31, 2019.
The United States has always been the main source of China's PVC imports, accounting for 25% - 45% of the total imports. On September 29, 2019, China cancelled the anti-dumping against the United States, which highlights the advantages of the United States in terms of source cost. On September 25, 2020, China launched another anti-dumping investigation. Because China's imports from the United States are mainly processing with incoming materials and processing with imported materials, it is expected that if China conducts anti-dumping against the United States again, the import volume of the United States will not have a great impact.
The unexpected public health events in 2020 is a major event in our life, and also a major event in the PVC market, because it has broken our understanding of the PVC market to a certain extent. The following is a reflection and summary of the PVC market in 2020. Only in this way can we better embrace the changes in the PVC market.
First, absolute price needs comprehensive evaluation
Sometimes when judging the market trend, we are used to comparing the historical situation, and then form our own understanding. For example, since 2017, in the fourth quarter, the price of PVC basically fluctuated around 7000 yuan / ton, so the absolute price of 7000 is basically the relative high price considered by the industry.
But 2020 is not the same. We should not only see such absolute price, but also the average price of the whole year. Because the sharply lower price in the first quarter has lowered the average price of the whole year, so even if the price rises to a 10-year high in the fourth quarter of 2020, the average price of 2020 is still lower than that of 2019. Extreme market conditions weaken the role of absolute price to a certain extent, and we should be cautious when we evaluate absolute price in the future. We should pay more attention to driving rather than absolute price.
Second, downstream demand and its acceptance of PVC price
In 2020, the downstream demand of PVC is full of toughness, the second quarter of catch-up, the demand performance is good, and the third quarter of foreign trade plays a supporting role, so the overall demand of PVC will continue to increase in 2020. We used to take the price of pvc7000 yuan / ton as the dividing line of profit and loss of downstream products. Therefore, when the price rises to more than 7000 yuan / ton, we habitually think that this price may be contradicted. However, when the price of PVC rises to 8000 yuan / ton or even 9000 yuan / ton in the fourth quarter of 2020, the downstream is still taking the goods.
Of course, on the one hand, because the downstream has already received the order, it is necessary to purchase in order to deliver the order. But on the other hand, we need to note that with the rise of raw material prices, some downstream companies are losing money, and there are also load reductions. However, most large and medium-sized enterprises have not significantly reduced their load.
This is because PVC prices were low in the first half of the year, and the overall profitability of downstream enterprises was relatively optimistic in the first half and even the third quarter, so they can tolerate high price PVC, and the overall profitability of the whole year is a bottom line. And we have to re evaluate the transmission speed of raw material prices. Generally speaking, there are some restrictions on the transmission speed of raw material prices, but there are some exceptions in extreme market conditions.
The above is the summary of the PVC market in 2020. The PVC market in 2020 gives us new thinking. Although it has gone out of the unexpected market, it is still only following the fundamentals. After the epidemic in 2021, the market is still full of great uncertainty, but market opportunities are constantly found by everyone. I wish you a good return in 2021.
