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2020.06.08   15:23

In the early stage, the price of crude oil bottomed out and PVC enterprises take the initiative to reduce the impact of load, PVC futures prices rebounded slightly.However, with the return of international crude oil prices weakness, PVC rebound may come to an end.

Falling demand

Public health events have a negative impact on global PVC demand.First, overseas public health incidents are still not effectively controlled. Most countries, including India, the largest export destination of PVC in China, still take strict personnel control and sealing measures, which makes the export volume of PVC and PVC downstream products paving materials decline.Second, the public health events have affected the construction of new real estate projects in China. Although the housing prices in some first-tier cities have gone up, it is difficult to avoid the real estate weakness in the context of the economic downturn which leads to the decline of residents' income and the government's renewed emphasis on the housing market.Third, global asset prices fell, the current aluminum price is at a low level, which makes the cheap aluminum products profile on the PVC profile demand formed a strong impact.

On the other hand, due to the impact of public health events, the downward pressure on the domestic economy has been increasing, with GDP falling by 6.8% in the first quarter compared with the same period last year.To stabilize the economy, the government has launched major infrastructure projects to stimulate the economy. The planned infrastructure projects this year amount to trillions of yuan, which will support the demand for PVC.At the same time, during public health events, medical equipment demand is good, which also has a certain support for PVC demand.

On the whole, although the big infrastructure construction has been planned and implemented, it has not been implemented. It is still difficult to determine the intensity and time of PVC demand stimulation.As for the demand of medical equipment, although it performs well, it is difficult to change the current situation of the overall demand decline of PVC due to its small proportion in PVC demand.

Enterprises cut production to save themselves

As the price of PVC continues to decline, the profits of PVC manufacturers continue to decline. Especially in the context of the sharp drop in oil prices, the cost advantages of PVC manufacturers of ethylene method begin to emerge.Up to April 16, the profit of PVC production enterprises of calcium carbide method in east China was only 220 yuan/ton, while the profit of PVC production enterprises of ethylene method was as high as 940 yuan/ton.Profits are at a very low level, forcing calcium carbide PVC production enterprises to reduce production to save themselves, in April intensive maintenance.Up to April 16, the operating rate of domestic PVC manufacturers was 70.10%, with a month-on-month growth of 1.99 percentage points and a year-on-year decline of 11.98 percentage points.Among them, the operating rate of calcium carbide method is 70.24%, with a month-on-month growth of 0.13 percentage points and a year-on-year decline of 12.79 percentage points.The ethylene method operating rate was 69.44%, with a month-on-month increase of 10.69 percentage points and a year-on-year decrease of 8.23 percentage points.

However, even if PVC production enterprises continue to reduce production, domestic PVC inventory trend is still difficult to change.As of April 17, the inventory of domestic PVC enterprises was 77,800 tons, 3,1995.31 tons higher than that of the same period last year, 69.85% higher than that of the same period last year.Social inventory was 717,808 tons, up 131,189.98 tons from the same period last year, up 22.36% from the same period last year.At present, the domestic PVC inventory is still at a high level, and there is no sign of decline. The high inventory, especially the high inventory of production enterprises, forces the enterprises to reduce the price and suppresses the PVC price.

Global storage is depleted

Domestic PVC production enterprises are mainly based on calcium carbide process, so the small change in oil price has little direct impact on PVC cost.However, if the oil price changes greatly, the overall PVC price will inevitably fluctuate.At the moment, there is an oversupply of crude oil, the global crude oil storage capacity is exhausted, the WTI crude oil futures contract has an unprecedented negative value, causing panic in the market.Although this is a special case and cannot truly reflect the true value of crude oil, from the current situation, the global public health events in the first half of the year are difficult to control, OPEC+ production cuts drop by a drop, countries still face severe crude oil storage problems, the weak oil price pattern is hard to change, PVC rebound environment is destroyed.

In short, at present, PVC market rebound kinetic energy exhaustion, short - term to maintain short - term thinking.

                                                                                                                                       By Feifei