Introduction
In the first half of 2024, the overall supply pressure on the domestic PVC Paste Resin market was not high, and demand performance was inconsistent. Prices showed a "rise fall rise" trend, with an average price slightly rising compared to the same period last year. In the second half of the year, there are plans to increase production capacity on the supply side, and it is currently difficult to find favorable support on the demand side. The price trend may first be strong and then weak.
In the first half of the year, the domestic PVC paste Resin market showed a "rise fall rise" trend. Due to the maintenance of individual enterprise installations in May, supply slightly declined and demand remained stable, resulting in a slight upward trend in prices from May to June. From January to June 2024, the average price of PVC paste resin in the East China market was 7901 yuan/ton, an increase of 5.12% compared to the same period last year at 7516 yuan/ton; The average price of Pvc Resin gloves in the North China market is 8111 yuan/ton, an increase of 6.88% compared to the same period last year at 7589 yuan/ton. As of June 26th, the domestic PVC paste resin market closed at 7950 yuan/ton, a price increase of 1.92% compared to the beginning of the year.
The high point of the domestic PVC resin market operation in the first half of 2024 occurred in late February and early March. The price of PVC resin bulk material in the East China market reached 8150 yuan/ton, and the price of PVC resin glove material in the North China market reached 8500 yuan/ton. On the one hand, demand gradually recovers after the Spring Festival, and on the other hand, many supply side enterprises have no inventory pressure, and there are many pre-sale orders, resulting in consecutive price increases. However, since mid March, market demand has been weak and export volume has declined, while the supply side remains at a relatively high level. Prices have experienced consecutive declines. By late April, the PVC resin market in North China closed at 7750 yuan/ton, while the resin glove market in East China closed at 7600 yuan/ton, reaching a low point in the first half of the year. In May, with the maintenance of individual enterprise equipment, there is still support for the demand for PVC paste resin gloves, and enterprise quotations have tentatively increased. Prices remained high and consolidated in June.
In the first half of the year, the price trend of PVC paste resin first rose, then fell, and then rebounded. The driving factors affecting the price trend mainly come from the supply side, domestic demand, and exports.
The industry's operating load rate remains relatively high, but the pressure on enterprises varies
In the first half of 2024, the domestic PVC paste resin supply side maintained a relatively high level. From January to June, the production of PVC paste resin powder was 598300 tons, an increase of 12.04% year-on-year. The industry average operating load rate was 73.29%, an increase of 9.23 percentage points year-on-year. In the first half of the year, there were not many domestic PVC resin maintenance enterprises, and the amount of maintenance losses was limited. The operating load rate of PVC resin powder enterprises in production remained relatively high, and some long-term shutdown enterprises resumed work. From the perspective of the industry supply side, both production and operating load rate increased significantly year-on-year. From January to February, supported by downstream stocking demand before the Spring Festival, although production increased year-on-year, many enterprises did not have inventory pressure, supporting price increases. From March to April, the production remained relatively high, but the demand side performance was poor, with some companies gradually increasing their inventory, increasing shipping pressure, and prices falling. From May to June, the industry supply remained relatively high, but the inventory pressure of most enterprises was not obvious for the time being, and prices rose and then stabilized at a high level.
The demand for PVC paste resin glove material is still acceptable, and the demand for large plate materials is average
In the first half of 2024, the performance of PVC paste resin glove materials and bulk materials in China was inconsistent. The downstream glove product enterprises of PVC paste resin glove material started operating well in the first half of the year, and the demand for overseas product orders in the first quarter remained good, supporting the increase in the operating load rate of domestic PVC glove product enterprises and showing a positive demand for paste resin glove material. The overseas product orders in the second quarter were still relatively ideal, but starting from the end of April, the export transportation of glove products slowed down due to rising sea freight and insufficient containers. Some PVC glove product enterprises increased their product inventory, and by June, the production line of the glove product industry had slightly decreased, but the overall impact was limited. Downstream enterprises mainly purchased on demand or on dips, with moderate demand for high priced brands. According to data from the General Administration of Customs of the People's Republic of China, the export volume of PVC gloves from January to May was 19.266 billion pairs, an increase of 29.06% compared to the same period in 2023.
The overall demand of the downstream product industry for PVC paste resin large plate materials was average in the first half of the year, while the overall demand for coated fabrics, toys, and automotive leather industries was decent. However, the demand for conveyor belts, leather, and yoga balls industries was poor. In the first quarter, some downstream products had replenishment demand before the Spring Festival, but with the resumption of downstream work after the holiday, some product orders performed average. From the end of the holiday to the second quarter, the downstream product industry for large plate materials mainly purchased on demand, with average enthusiasm for entering the market.
Export reduction increases domestic sales pressure for enterprises
According to data released by the General Administration of Customs of the People's Republic of China, the total export volume of PVC paste resin from January to May 2024 was 49803.38 tons, a decrease of 22.79% compared to the same period in 2023. From the perspective of export trade partners, the top three export trade partners from January to May were a certain European country, India, and Pakistan. Among them, 28900 tons were exported to a certain European country, a decrease of 22.04% compared to the same period last year. Due to settlement and other issues, the source of goods exported to that country decreased; Export to India was 7300 tons, a decrease of 32.39% over the same period last year. As the Ministry of Commerce and Industry of India made a preliminary anti-dumping determination recommendation on PVC paste resin originating in or imported from Chinese Mainland, South Korea, Malaysia, Norway, Thailand and Taiwan, China, the source of goods exported to India began to gradually decrease from May to June. The decrease in export volume has led some enterprises to shift their export pressure into domestic sales pressure.
Outlook for the second half of the year: The PVC paste resin market may first be strong and then weak
The driving factors affecting the price trend of domestic PVC paste resin in the second half of the year are still mainly based on the supply and demand fundamentals. The overall supply is still expected to increase, and it may be difficult to find bright spots on the demand side. The price of PVC paste may first be strong and then weak.
Supply side: Some PVC paste resin enterprises have concentrated their equipment maintenance in the third quarter, especially from July to August. It is expected that the supply side inventory will decrease from July to August, which will have a positive impact on the market. However, since September, the number of maintenance enterprises has decreased. In the fourth quarter, due to the cooling weather, most enterprises will not arrange planned equipment maintenance. In October, China Salt Inner Mongolia Chemical still has a production plan for 20000 tons/year of equipment, which will increase the pressure on the supply side of the industry.
On the demand side: From the perspective of the demand for PVC paste resin in large quantities, the high temperature and rainy weather in southern China from July to August will affect the production of downstream product enterprises. September to October is the traditional peak season for demand during the "Golden September and Silver October" period. However, in the second half of the year, it is still necessary to pay attention to whether some exported products are still affected by factors such as high export shipping costs, and the export order volume of products may affect the production of downstream product enterprises. From the perspective of PVC resin glove material demand, it is expected that overseas demand for glove products will remain stable in the second half of the year, and it is expected that glove product enterprises will start production in the second half of the year or there will be little overall change.
Export: On June 13, the Tax Bureau of the Ministry of Finance of India issued Circular No. 09/2024 Customers (ADD), stating that it accepted the preliminary determination proposal of anti-dumping made by the Ministry of Commerce and Industry of India on April 26, 2024 against PVC paste resin originating in or imported from Chinese Mainland, South Korea, Malaysia, Norway, Thailand and Taiwan, China, and decided to impose a temporary anti-dumping duty for six months on the products involved in the above countries and regions, including a temporary anti-dumping duty of 115-600 dollars/ton on PVC paste resin in Chinese Mainland. Affected by this, the supply of PVC paste resin exported to India will continue to decrease. In addition, there may still be a significant increase in the supply of goods exported to a certain European country, and it is expected that there will be no bullish support for the export side in the second half of the year.
Raw material side: It is expected that the market price of calcium carbide will show a state of low first and then high in the second half of the year. In the early third quarter, under the drag of negative factors such as concentrated downstream maintenance, although the production of calcium carbide may not be stable, the overall price focus will still decline, or a new low price breakthrough may be achieved within the year. As downstream maintenance gradually decreases and new demand gradually increases, although the production of calcium carbide will also improve, it is expected that the price center will gradually shift upwards from the bottom. The fourth quarter is the highest price level of the year, but it may be difficult to achieve a new breakthrough from the high level of the year.
Overall, from July to August in the third quarter of the second half of the year, the supply of PVC paste resin decreased due to the centralized maintenance of enterprise equipment. However, the maintenance of enterprises in the fourth quarter was limited, and there are production plans for new production capacity. It is expected that the supply side will have an increase in production capacity; However, it is currently difficult to find bright spots on the demand side to boost, and there is an expectation of increased supply and demand pressure in the market in the second half of the year. It is expected that market prices may first be strong and then weak.
