Introduction
In 2023, the price center of PVC Paste Resin in China will continue to shift downwards, with the industry's operating load rate reaching the second highest point in five years and export volume reaching a historic high. However, the driving force for domestic demand release is insufficient, and market supply and demand pressure still exists. The PVC paste Resin market is weak and volatile. In 2024, there is still pressure on the supply of PVC paste resin, and exports may remain relatively high. We are concerned about the expected improvement in domestic demand, and the p e supply pressure in the PVC paste resin industry is still significant in 2023. The main reason for the significant supply pressure this year is that, on the one hand, the industry's capacity utilization rate is relatively high, industry production has increased month on month, and supply side pressure still exists. On the other hand, it is difficult to find highlights on the demand side, and the overall performance is relatively weak. In 2023, the price of PVC paste resin first fluctuated downwards, then rose and then fell back, and the overall price center continued to shift downwards, which is in line with the forecast in our 2022 annual report.
The price center has shifted downwards, and profits have decsed month on month
In 2023, the overall price of PVC paste resin in China showed a trend of first fluctuating downward, then rising and then falling back. In the first half of the year, the overall price was weak, and in the third quarter, the price bottomed out and rebounded. In the fourth quarter, the high point fell back, and at the end of the year, the price slightly rebounded. The high point of the average price appeared in mid September at 8675 yuan/ton, and the low point of the average price appeared in late June at 7175 yuan/ton, with a difference of 1500 yuan/ton between high and low prices. In 2023, the average price of PVC paste resin in China was 7835 yuan/ton, a decrease of 15.45% compared to the same period last year; The average price of bulk materials is 7803 yuan/ton, a decrease of 15.41% compared to the same period last year. The average price of glove materials is 7867 yuan/ton, a decrease of 15.49% compared to the same period last year. The factors that affect the price trend of PVC paste resin in China in 2023 mainly come from changes in supply, demand, and cost. Let's take a detailed look at it in stages:
In 2023, the price of PVC paste resin in China showed a trend of first fluctuating downward, then rising and then downward. The overall price of raw material calcium carbide was weak and fluctuating, with the overall decline of raw material calcium carbide being greater than that of PVC paste. The gross profit of PVC paste in the third quarter changed from negative to positive, and the price of raw material calcium carbide slightly increased in the middle and later stages of the fourth quarter. The center of gravity of PVC paste price shifted downward, and PVC paste resin experienced losses again. In 2023, the gross profit of PVC paste continued to be in a loss making state from January to July. However, with the centralized maintenance of PVC paste resin enterprises from July to August, the industry production decreased significantly, and the market supply was less than demand. The price of PVC paste resin increased significantly, while the increase in raw material calcium carbide was limited. From August, the gross profit of PVC paste resin turned from loss to profit, and from mid November, PVC paste resin suffered a slight loss.
Taking Hebei region as an example, the average gross profit of PVC paste resin for purchased calcium carbide in 2023 was -422 yuan/ton, a decrease of 149 yuan/ton compared to the same period in 2022, which was -273 yuan/ton. The high point of gross profit appeared in mid October at 608 yuan/ton, and the lowest value appeared in early January at -1698 yuan/ton.
The utilization rate of industry capacity has significantly improved compared to last year
Both the newly added and phased out production capacity of PVC paste in China will remain in 2023. Henan Jiyuan Jinxiang's newly added production capacity of 60000 tons/year was put into operation in June, while Xiyang Chemical's 100000 tons/year production capacity was phased out due to long-term shutdown. In summary, the total production capacity in 2023 was 1.495 million tons, a decrease of 2.61% compared to 2022. In 2023, the total production capacity of PVC paste decreased month on month, and the annual output increased to 1.0696 million tons, with an industry capacity utilization rate of 71.55%.
The monthly production of PVC paste resin in China has shown significant changes in 2023. In 2023, the production of PVC paste in China was 1.0696 million tons, an increase of 4.09% compared to 2022, with an average monthly production of 89100 tons, an increase of 35000 tons compared to 2022. The lowest monthly production occurred in July at 67400 tons, a decrease of 21700 tons from the average monthly production in 2023; In 2023, the majority of PVC paste enterprise equipment maintenance will be concentrated in July, with some enterprises experiencing an increase in maintenance time. In addition, Xinjiang Tianye temporarily stopped work due to unexpected factors, resulting in an average operating load rate of only 45.44% in the industry in July. The peak monthly production was 103700 tons in October, which is higher than the monthly average production of 14500 tons. Most domestic PVC paste enterprises focused on equipment maintenance in the third quarter. In October, except for the temporary shutdown of the Jining Zhongyin equipment, there were no other enterprise equipment maintenance, and some production enterprises increased their operating load rate to full load. In October, the operating load rate of the domestic PVC paste industry was 73.83%, reaching the peak monthly operating load rate in 2023.
Export volume reached a historic high in 2023
In 2023, the export volume of PVC paste resin in China was 146700 tons, an increase of 38.53% month on month, and the export dependence was 13.72%, setting a new historical high. In terms of monthly export volume, the average monthly export volume is 12200 tons, which is a significant increase from the average monthly export volume of 8800 tons in 2022. Only July and October have slightly decreased year-on-year, while other months have increased compared to the same period last year. The supply of goods exported to Europe in 2023 remains high, which is also an important factor driving the increase in China's PVC paste resin export volume.
From the perspective of trade volume with export trading partners, 84600 tons were exported to a certain European country, ranking first, accounting for 57.68% of the total export volume for the year. In previous years, the country mainly relied on purchasing European goods. However, due to unexpected factors in the second quarter of 2022, some of the raw material procurement was transferred to China, with the majority being domestic ethylene based Pvc Resin grades, which led to a significant increase in the export of PVC resin from China to the country. Exports to India amounted to 21000 tons, an increase of 9100 tons or 77% compared to 2022, ranking second.
The price center of the supply and demand game in 2024 may not change much compared to 2023
In 2024, there may still be a game between the supply and demand of PVC paste resin. At present, the supply side has not heard of a clear plan to increase production capacity in 2024, but due to the gradually prominent overcapacity situation in the PVC paste resin industry, there is certain pressure on the supply side. In terms of demand, the demand for glove materials will improve in the second half of 2023, but in 2024, attention still needs to be paid to overseas demand for glove products; From the performance expectations of other downstream industries, the growth rate of demand in industries such as automotive leather, automotive interior, and coated fabrics may be relatively stable, but there is a weak expectation of demand in industries such as wallpaper and leather. Overall, it is expected that the demand for PVC paste resin will slightly improve in 2024, but the degree of improvement still needs to be observed. The export sector may continue to remain relatively optimistic, but we need to be vigilant about the impact of the resumption of India's anti-dumping policies. It is estimated that the price center of PVC paste in 2024 may not change much compared to 2023.
