Since the end of last year, the price of PVC has gone through a high of 9000 yuan / ton, the price center of PVC industry has increased significantly compared with previous years, and the PVC market has fluctuated sharply in recent months. At present, the price is back to a high level, but from the current domestic supply and demand side, cost side, export and macro factors, there are still many positive factors for PVC. It is expected that the PVC market will still maintain a high level of volatility and the upward trend of the center of gravity in the second quarter.
Recently, the price of domestic PVC market fluctuated greatly. After the price rose to a high of 9000 yuan / ton in the middle of December last year, the price dropped by more than 1900 yuan / ton in the following month, with a decrease rate of 21.14%. After the price fell to 7100 yuan / ton in the middle of January, the price rebounded and rose rapidly after the year. At the end of February, the average price of East China SG-5 rose to 8751 yuan / ton, with an increase of 23.25%, It's only one step away from last year's highest price.
The sharp drop in prices before the year was mainly affected by the following four aspects:
1. High prices inhibit downstream construction. Small enterprises began to reduce production and stop production in early December, and large enterprises also reduced production in mid December;
2. The number of maintenance enterprises decreased significantly, and the start-up load of PVC enterprises increased to more than 82%;
3. Social inventory in East and South China began to increase in early December, and the increasing trend was confirmed in mid December;
4. The off-season is coming, and the average price of PVC in previous years is below 7000 yuan / ton, so the market does not adapt to the high price.
The sharp rise in prices after the year is mainly reflected in the following four aspects:
1. Before the Spring Festival, the number of traders and downstream stock increased, and the sales pressure of upstream enterprises eased;
2. Strong macro expectations, a new round of stimulus plan in the United States and the expectation that international investment banks are optimistic about commodities, boosting the market atmosphere;
3. The export arbitrage window continues to open, and exports divert domestic sources of goods;
4. After the festival, the United States encountered a cold wave, and more than 4 million tons of devices stopped unexpectedly, which made the international supply of goods even more tense.
In March, the PVC market fluctuated violently, and the daily price of 200-300 yuan / ton was greatly adjusted, which made it difficult for many market participants to adapt to the new rhythm. On the one hand, it is because there are a large number of profit taking after the sharp rise, and there is profit taking in the case of market turbulence. On the other hand, the price once again stood at an all-time high, the downstream resistance was heavy, and the downward transmission of price met resistance. For the next market trend, participants have a large wait-and-see mood.
Combined with the current macro aspect, domestic supply and demand side, cost side, export and other factors, the positive factors of PVC are still too many, and it is expected that the PVC market will still maintain the trend of high volatility and upward shift of the center of gravity in the second quarter.
Domestic liquidity has tightened, and stimulus measures in Europe and the United States are still not over
Since May last year, with the recovery of potential economic growth, domestic monetary policy has returned from crisis to normal mode, and structural easing and structural tightening coexist. In January 2021, the central bank's investment in the open market decreased significantly, and the monetary policy tightened marginally again. The marginal tightening of domestic monetary policy has led to a wave of obvious adjustment in the stock market. However, the commodity market is less affected by this. The commodity market pays more attention to the influence of monetary policy in Europe and the United States. From the end of last year, the US $1.9 trillion stimulus plan is expected to promote the domestic commodity market to rise. With the recent $1.9 trillion stimulus plan coming into effect, the US monetary policy in the future is loose as a whole It is expected that there will still be support for the domestic commodity market.
Supply falls from high level and downstream passively accepts high price
The first quarter is generally the peak season for PVC start-up, and the start-up of the industry is often at an annual high. From the performance of the first quarter of this year, the weekly start-up of PVC industry has been maintained at more than 84%, and the weekly start-up load of PVC reached 87.86% at the end of February, which is basically the limit of the start-up load of the industry. After March, due to the influence of raw materials, some units began to reduce production, and the second quarter was PV It is expected that the supply will gradually decrease from a high level in the centralized maintenance season of C.
After the rapid rise of PVC prices after the festival, the downstream was once very resistant, and the downward transmission of prices encountered resistance. However, with the gradual price increase of downstream products, the start-up of downstream products also recovered significantly. The start-up of flooring, leather, cable, film, etc. gradually recovered to 70-80%, and the pipe load also recovered to more than 50%. The terminal products enterprises gradually passively accepted the high prices.
PVC inventory seasonal high lower than expected
Inventory is the most direct manifestation of the result of the game between supply and demand. Since the beginning of this year, seasonal inventory has increased as usual, and some warehouses in East and South China have burst. However, from the inventory performance of Zhuo Chuang statistics, the inventory inflection point appeared in East China from the week of March 5, and the inventory in East China will still drop this week. The inventory decline in East China is two weeks earlier than in previous years, and the total inventory in East China and South China is also lower than that in the same period of 2019 and 2020. The improved performance of inventory exceeds expectations, which greatly boosts market confidence.
U.S. device recovery is relatively slow, exports continue to support
After the Spring Festival, due to the extremely cold weather in the United States, a large number of power systems in Texas were paralyzed, and many chemical devices stopped unexpectedly, involving more than 4 million tons of PVC devices. One month later, 726000 tons of units have resumed operation, but the load is not high, 1.74 million tons of units are ready to restart, and it is not clear when the other 1.738 million tons of units will restart. Judging from the current restart speed of U.S. devices, it is expected that the shortage of goods in the international market will last until after May. In the future, export support will still exist. It has been heard that next week Taiwan Formosa Plastics will report the April shipping price, and the market is expected to increase by about US $300 / ton compared with February.
According to Zhuo Chuang's statistics, the daily loss of calcium carbide due to policy factors is about 4200 tons, accounting for about 5.19% of the total output of the country. Calcium carbide itself is in a tight balance situation. With the reduction of more than 5% output, calcium carbide is obviously in short supply and the price soars. By the middle of March, the price of calcium carbide has reached the highest level in history. The arrival price of calcium carbide in Shandong has reached a high level of 5000 yuan / ton, and the equivalent cost of PVC will reach about 8600 yuan / ton. The profits of PVC enterprises purchasing calcium carbide are completely eaten up by calcium carbide.
In addition to calcium carbide raw materials, the cost pressure of imported VCM enterprises will be more obvious. At present, the latest VCM import negotiation price has not yet come out, but the international VCM price has a huge correlation with PVC price. This cold wave in the United States also led to the unexpected shutdown of a large number of VCM devices, and the international supply of VCM is in short supply. The market expects that the VCM price to be negotiated in April next week will reach US $1300 / T in China If calculated according to this price, the cost of PVC enterprises importing VCM will reach more than 10000 yuan / ton.
According to statistics, there are four PVC enterprises (producing general Resin) outsourcing VCM, with a total capacity of 1.35 million tons, accounting for 5.24% of the national capacity. At present, Dongcao has stopped for maintenance, the load of Liancheng has been reduced to about 40%, and other construction is normal for the time being. However, with the use of low-cost raw materials in the early stage, the cost pressure of these enterprises will be obvious in the future.
Therefore, on the whole, although the price of PVC has reached a historical high, there are still many positive factors. Therefore, it is expected that the PVC market will still maintain the trend of high volatility and upward shift of the center of gravity in the second quarter.
