Domestic demand for PVC in China is weakened; Affected by weak overseas supply and strong demand, China's PVC export increased significantly in 2022, reaching 1.966 million tons, a record high. Looking forward to 2023, China's PVC exports may fall back due to the increase in domestic demand and weak demand at the competitive end.
China's PVC powder industry has shown a rapid development trend in recent years, with a relatively complete PVC industry chain. The quality and price of PVC powder have been recognized in India, Vietnam, Bangladesh and other countries, and trade cooperation has been established. At present, China is a major exporter of PVC in the world. The export volume increased significantly in 2021 and 2022, and reached a record high of 1.966 million tons in 2022. The export growth of Pvc Resin in China is mainly affected by two aspects. First, the domestic real estate industry is sluggish and domestic demand is weak, and supply exceeds demand. Enterprises actively seek export channels. Second, the policy liberalization of India as a major demand country has promoted the export of PVC Resin in China.
The weak domestic demand brought by the real estate recession has promoted the export of PVC resin
About 60% of PVC downstream in China is used in real estate building materials, such as pipes, doors and windows. In 2021, with the adjustment of real estate policies and the impact of health events, China's real estate investment foam will be removed, and the real estate market transactions will significantly cool down. According to the statistics of Zhuochuang Information, the demand for PVC will decrease by 0.99% in 2021. The domestic surplus production will lead enterprises to actively seek sales channels, and exports will significantly increase. The domestic real estate market will further weaken in 2022. In 2022, the new construction area of real estate development enterprises will be 1205.87 million square meters, down 39.4%. The cumulative completed area decreased by 15% year-on-year. Affected by this, the demand for PVC shrank. According to the statistics of Zhuochuang Information, the demand for PVC decreased by 4.9% year-on-year to 19761300 tons in 2022. The sluggish domestic demand, to a certain extent, encourages enterprises to seek export channels, thus driving the growth of export volume.
Strong overseas demand side promotes PVC export
From the perspective of overseas demand, India, as a large agricultural country, its main PVC demand comes from agricultural pipeline demand, accounting for 66% of the total demand. However, its PVC resin capacity is far lower than the total demand, and it is highly dependent on overseas imports. In August 2016, the Ministry of Commerce and Industry of India imposed anti-dumping duties on Chinese PVC resin and other products, which seriously hindered the export of Chinese PVC film products. On January 31, 2022, the antidumping policy of the Ministry of Commerce and Industry of India on China's PVC expired, and the cancellation of the antidumping tax enhanced the advantages of China's PVC exporting countries, which was reflected in the data level. The PVC resin exported to India in 2022 accounted for 29.63% of China's exports, with a month-on-month increase of 12.3%.
Looking forward to the future, China's PVC resin export may fall back, but the decline is limited
Based on the analysis of domestic demand and overseas factors, looking forward to 2023, with the continuous development of the "guaranteed delivery" policy, the completed area of real estate in China is at the bottom stage and is expected to grow slowly. At that time, the domestic demand of PVC will also increase slowly, and some exports may be converted to domestic demand, reducing exports. From the perspective of overseas factors, Europe and the United States are subject to the impact of interest rate increase caused by high inflation. The increase in corporate borrowing costs leads to weak demand for PVC downstream. The supply of goods from Europe and the United States is in surplus, and it is expected that exports from Europe and the United States will increase further in 2023, suppressing China's exports. At the same time, due to the increase in India's agricultural infrastructure budget, the demand for PVC pipes may further increase, which will play a certain role in supporting China's PVC exports.
In the next 1 to 5 years, the expansion of PVC powder production in the world is mainly concentrated in China, and many of them are vinyl PVC resin. The domestic probability is still at the stage of overcapacity. With the promotion of China's chemical refining and chemical integration and the gradual development of PVC production capacity towards raw material balance and diversification, the industrial chain will further mature. At that time, China's surplus production will be dumped to the outside world, which will impact the global PVC powder market. Backward devices with high cost and some small and medium-sized enterprises with immature industrial chain may be eliminated. On the whole, China's PVC will have great potential in the global market in the next five years.
