For half a year, the operation logic of the domestic PVC market has been alternating between expectation and reality, and the operation and development of the PVC market have also appeared many unexpected. In the first half of the year, the domestic demand performance was less than expected. Although the export volume reached a new high, which made up for the lack of domestic demand to a certain extent, the social inventory increased anti seasonally, and the contradiction of phased supply exceeding demand of PVC gradually became prominent; In addition, the rise of crude oil and the unexpected interest rate hike of the Federal Reserve also brought emotional and macro impacts to the market.
Domestic PVC demand fell significantly in the first half of the year
In the first half of 2022, China's domestic PVC consumption decreased significantly compared with the same period last year, and the domestic PVC demand was less than expected. In the first half of the year, domestic PVC consumption was about 9.6868 million tons, down 8.05% from the same period last year. The decline in domestic PVC demand is mainly due to the poor performance of the real estate industry. PVC is closely related to the real estate industry, and more than 60% of PVC terminal downstream products are used in real estate related industries. The data related to real estate has been falling since the second half of 2021. In 2022, the downward range continues to increase. The cumulative area of new construction and completion of real estate has fallen significantly year-on-year. The orders of PVC pipes, profiles and other industries have decreased significantly, and the construction starts this year have decreased significantly compared with previous years.
Domestic PVC exports hit a new high in the first half of the year
In the first half of the year, China's PVC exports increased further compared with the same period in 2021, effectively making up for the lack of domestic demand. In the first half of 2022, the export volume of PVC powder in China was 1242300 tons, an increase of 140100 tons or 12.71% compared with 1102200 tons in the same period of 2021. The increase in exports in the first half of the year is mainly due to the fact that, on the one hand, since the end of February 2022, the price of crude oil has risen sharply, the cost of PVC powder in Europe and the United States has risen sharply, the supply of goods in some European countries is in short supply, and the supply of goods exported by China to some European countries has increased year-on-year; On the other hand, India's anti-dumping policy on PVC powder against China officially expired in February 2022, and the amount of PVC powder exported by China to India increased significantly. The total amount of PVC powder exported to India in the first half of the year was 379000 tons, an increase of 150000 tons year-on-year in the first half of 2021.
In the first half of the year, the social inventory of PVC remained high and increased anti seasonally
VC social inventory remained high this year, increasing instead of decreasing in the second quarter. PVC social inventory has a certain seasonal law. Generally, the first quarter is in the stage of accumulating inventory, but the second quarter is the traditional peak season of PVC. Due to the recovery of PVC centralized maintenance and superimposed demand, PVC social inventory will continue to go to inventory in the second quarter. However, the decline of social inventory in the second quarter of this year is very slow, and it will rise instead of falling from May to June. This is mainly caused by the weakening of demand beyond expectation and the oversupply of domestic PVC market in the short term.
Crude oil rose sharply in the first half of the year & the Federal Reserve raised interest rates more than expected
Affected by geopolitics, the international crude oil price stood at $100 / barrel from the beginning of March, and the Brent crude oil price peaked at $139 / barrel on March 7. Then the international crude oil price fluctuated above $100 / barrel in the first half of the year. The rapid rise of crude oil in the first quarter improved the performance of energy and chemical commodities, and PVC spot goods also followed suit. The Fed's unexpected interest rate hike cast a shadow of pessimism on commodities. In June, the United States raised interest rates by 75 BP more than expected, which was bad for the mentality of market participants. Commodities were under pressure, and PVC futures also continued to decline.
In the first half of the year, the PVC market was full of changes and unpredictable, but all changes were inseparable. The main reason for affecting the operation of the market was still the fundamentals and macro environment of PVC. For the second half of the year, the demand side is still full of great uncertainty, and it is expected to improve month on month, but it is expected that there will be no significant improvement. However, some new devices on the supply side are still planned to be put into operation, so it is expected that there will still be some pressure on the supply and demand side in the second half of the year, and the focus will be on the changes in social inventory; Macroscopically, we need to pay attention to crude oil, the Federal Reserve and domestic policy trends.
