Introduction: In the first quarter of 2024, Pvc Resin production enterprises from different raw material sources maintained an overall production load of 80%. Since 2024, companies that engage in external mining of calcium carbide and ethylene have been in a loss making situation. Entering April, with varying degrees of decline in upstream raw materials and support from spring inspection factors, PVC powder prices have stopped falling and stabilized, resulting in improved profit margins.
Cost Trends of PVC Resin in Different Processes
Since 2024, the production costs of two PVC resin processes have fluctuated slightly. For the calcium carbide method, calcium carbide is the largest cost component of PVC powder produced by the calcium carbide method. The price and unit consumption of calcium carbide also determine the cost of PVC production enterprises using the calcium carbide method. In the first quarter, the cost of PVC produced by calcium carbide method showed a trend of first falling, then rising and then falling. From January to February, the price of calcium carbide fluctuated and declined due to the weakening of costs and supply-demand contradictions, driving down the cost of PVC; With the intensification of losses for calcium carbide enterprises, production enterprises have experienced negative load reduction and production stoppage, and the supply side has declined. In March, the calcium carbide market began to rise, and in April, the domestic calcium carbide market once again experienced a downward trend, which is quite obvious. As of April 18th, the mainstream trade price in Wuhai was reported at 2600 yuan/ton. With the increasing maintenance of downstream PVC enterprises, the demand for calcium carbide has decreased. Against the background of oversupply, the price of calcium carbide has gradually declined, and the cost of PVC production enterprises using calcium carbide method has shifted downwards. As of April 18th, the average cost of PVC production enterprises using carbide method in China was 5448 yuan/ton, a month on month decrease of 5.33% compared to March.
For the ethylene method, the price fluctuations of ethylene and vinyl chloride have a more significant impact on the production cost of ethylene based PVC resin. In the first quarter of 2024, the cost of ethylene based PVC showed a fluctuating upward trend, mainly due to the continuous increase in prices of ethylene and vinyl chloride in Northeast Asia due to supply shortages, driving up the cost of ethylene based PVC. Entering April, the Asian ethylene market remained stable with a weak performance. During the week, although the naphtha cracking units in Japan and South Korea were considered to operate at reduced loads due to increased cost pressures, the current bearish news of sufficient supply in the spot market has led to a decrease in the focus of on-site negotiations, with new orders reaching $915 per ton. The prices of ethylene and domestic vinyl chloride in Northeast Asia have been lowered, and the costs of ethylene based PVC powder production enterprises have shifted downwards. As of April 18th, the average cost of ethylene based PVC production enterprises in China was 6122 yuan/ton, an increase of 0.22% compared to March.
Since April, the gross profit performance of the two production processes has shown differentiation, as the cost decline is greater than the domestic PVC resin price decline, resulting in varying degrees of improvement in profit performance. The change in gross profit of PVC powder produced by calcium carbide method is mainly affected by the prices of raw materials such as calcium carbide and PVC resin. The decline in raw material calcium carbide prices in April has shifted profit margins to PVC powder, and the cost pressure of PVC resin produced by calcium carbide method has slightly eased. PVC resin enterprises that purchase calcium carbide have reduced losses, while enterprises that own calcium carbide in the northwest have increased profits. As of April 18th, the average gross profit of PVC production enterprises produced by calcium carbide method in China was 3.78 yuan/ton, an increase of 101.12% compared to March.
The main factors affecting the gross profit of ethylene based PVC enterprises come from fluctuations in the prices of ethylene, vinyl chloride, and PVC powder. In April, Asian ethylene prices remained stable and weak, with CFR Northeast Asia's weekly average price reaching $921/ton, a month on month decrease of 0.97%, resulting in a decrease in the cost of ethylene based PVC. The gross profit of ethylene based PVC resin has slightly improved, but it is still in a negative loss situation. As of April 18th, the average gross profit of PVC production enterprises using ethylene method in China was -334.23 yuan/ton, a decrease of 116.35% compared to March.
Operation status of PVC upstream equipment
In April, the maintenance of PVC resin enterprises gradually began, and the start of production quickly dropped to around 73%, but it was 3 percentage points higher than the same period last year. Although PVC resin powder was in a loss, the comprehensive profit of chlor alkali still existed. As a result, PVC resin powder production enterprises took the initiative to reduce their burden not much, and the start of production has been at a relatively high level. This week, the maintenance loss was 164200 tons, a decrease of 0.24% compared to the same period last year. Due to the impact of new real estate development and other related factors, the demand for the building materials sector weakened, and the demand for industries such as profiles and pipes was sluggish. The industrial start of production decreased by more than 10% year-on-year, and the overall demand was weak. Despite the high upstream opening, the.
At present, domestic supply pressure is still ongoing, coupled with weak terminal demand and low procurement enthusiasm, resulting in slow digestion of supply sources. From April to May, the maintenance of PVC powder production enterprises remained relatively concentrated, and the supply pressure may have eased due to a decrease in production. However, despite the lack of significant improvement in downstream demand, the overall inventory pressure still exists. From a cost perspective, the recent rebound in the cost of blue charcoal has led to a continuous increase in bidding prices for coal mines, providing support for the cost of calcium carbide. This has reduced the downward space for calcium carbide, and coupled with maintenance plans by calcium carbide companies next week, there is an expectation of a rebound in calcium carbide prices, which in turn will provide some cost support for PVC resin. In terms of PVC powder prices, in the short term, due to the recovery of maintenance enterprises in early April and the expected increase in construction next week, the overall supply will increase. The price of SG-5 in East China is expected to be between 5500-5650 yuan/ton, and it may be difficult for PVC resin production enterprises to have a significant increase in profits.
