After the Spring Festival this year, the prices of chemical products went up collectively, but the trend began to differentiate in the middle and late March. Polyolefin entered the adjustment stage, but PVC still maintained a strong trend. Last week, PVC futures prices hit a 10-year high. Market participants remind investors to look at the changes of the market rationally.
Recently, the Ministry of industry and information technology stressed that the price of domestic chemical raw materials rose sharply in recent years. Most of the factors related to the price rise are short-term and sudden, and the commodity price does not have the basis for long-term rise. This round of commodity price rise has an impact on the manufacturing industry, but the impact is generally controllable. In the next step, the Ministry of industry and information technology, together with relevant departments, will actively take measures to stabilize the prices of raw materials.
"3P" rose after the trend differentiation
In the first quarter, the prices of PVC, PE and PP rose sharply, with the increase of 20%, 10% and 9% respectively. The strong price of PVC is mainly related to the changes of its supply and demand side and cost side. In recent two years, calcium carbide and PVC new capacity put in speed does not match, there is a supply gap. In this context, once the calcium carbide industry is affected by environmental protection measures, the price is easy to rise rapidly, thus driving the price of PVC at the cost end.
In recent years, due to the elimination of backward production capacity by environmental protection policies, the production speed of calcium carbide has slowed down significantly. Baotou, Erdos and other places in Inner Mongolia have issued corresponding regional policies, aiming at high energy consuming enterprises, they have introduced detailed control measures such as reducing power consumption, reducing load, limiting power, and increasing power cost. Affected by this, the domestic calcium carbide supply is tight, and the price has soared since the middle and late February, with a cumulative increase of nearly 2000 yuan / ton by the middle of March.
Calcium carbide is an important part of PVC production cost. The soaring price of calcium carbide leads to the rising production cost of PVC. The highest price of calcium carbide in Shandong in the first quarter was 5665 yuan / ton, and the corresponding PVC production cost was about 9600 yuan / ton; The highest price of calcium carbide in Inner Mongolia in the first quarter is 5000 yuan / ton, and the corresponding PVC production cost is about 8550 yuan / ton.
Although the price of calcium carbide dropped from a high level after the middle and late March, the price of calcium carbide began to stabilize and rebound recently. Due to the recovery of downstream demand and the shortage of calcium carbide supply in Inner Mongolia, Ningxia calcium carbide mostly supplies PVC enterprises with purchased calcium carbide. All these factors support the price of calcium carbide, and the support of the cost side is expected to strengthen at present.
In addition, the cold current in North America led to the shutdown of about 3.5 million tons of PVC plants in the early stage, and the tight international supply led to a sharp increase in PVC exports. At present, the export arbitrage window is open. Although the epidemic situation in India is grim, the overall export demand is still not bad. From the perspective of internal demand, it is the peak demand season at present. The downstream factories have started to rise to a high level, and the large factories have basically recovered to 70% to 80%, or even higher. Midstream traders' inventory continued to decline, indicating that downstream demand is strong. The overall order of the downstream is OK, approaching may day, and there is a certain demand for goods preparation in the downstream.
From the perspective of domestic market, the petrochemical industry strictly controls the stock before the festival, and the stock before the festival is at the low point in recent years. This year, the State advocates celebrating the Chinese new year on the spot. Some large factories have good orders and continuous production, which improves the operating rate of the downstream during the Spring Festival.
However, as the impact of the accident subsided and the crude oil price fell, the contradiction between supply and demand in the market gradually exposed. Although the stock accumulation of petrochemicals during the Spring Festival this year is significantly lower than that in previous years, the stock removal of petrochemicals after the festival is also the slowest in recent years, and the inventory in the intermediate circulation link remains high. Due to the high price of raw materials and poor cost transmission in the downstream, it is difficult to expand the demand.
From the cost side, supply and demand both sides support synchronous weakening, the price began to fall. However, from mid March, the trend of the three varieties began to differentiate, plastic and Polypropylene kept the same downward trend, but PVC showed an extremely strong performance.
PVC futures prices hit a 10-year high
Last week, the current price of PVC reached a 10-year high, which many market participants think is reasonable. The strong fundamentals are the main driving force to support the rising price of PVC.
Since the beginning of this year, PVC prices have risen one after another, mainly due to the impact of the cold wave in the United States that began at the end of February. The cold wave caused a large number of PVC plants in Texas to shut down due to power problems. The United States is the main supplier of PVC in the world. Affected by the cold wave, many PVC factories stop production, which supports the price of PVC market with tight international supply.
In the second half of last year, the operation of olefin plants in Europe and the United States was abnormal. In addition, due to the cold wave in the United States in February this year, power equipment was interrupted and chlor alkali plants were damaged. In addition, the real estate boom in the United States continued to rise, and foreign PVC prices continued to rise. The US export price (FAS Houston) rose from 1450 US dollars / ton to 1800 US dollars / ton. The CFR price of Formosa Plastics in China rose from 1160 yuan / ton to 1510 yuan / ton, equivalent to RMB import cost of 11000-12000 yuan / ton. Domestic export space opened up, with 510000 tons of exports in the first quarter, exceeding the annual level of 2019 and approaching the annual level of 2020.
In fact, the export volume of PVC increased more than expected. Since August last year, the price gap between domestic and foreign markets has gradually expanded, the export arbitrage window has opened, and the PVC export market is in a good situation.
In 2021, the PVC export market is still optimistic, and the number of export orders has increased significantly. Statistics show that in the first quarter, China's PVC exports totaled 509300 tons, significantly higher than the level of the same period over the years. Among them, the export volume in March reached 229300 tons, the overseas epidemic situation improved, and the demand for PVC recovered rapidly, but the recovery of PVC production was not sufficient, which led to a great increase in foreign trade demand and a significant increase in the role of PVC export market in stimulating consumption.
With the acceleration of global economic recovery and the improvement of macro-economic environment, domestic downstream demand for PVC has gradually increased. The proportion of PVC downstream products has little change, and pipes / pipe fittings, profiles / doors and windows are in an important position, which is the main driving force of PVC demand growth. Pipes / Fittings and profiles / doors and windows are mainly used in the construction field. The development of domestic real estate construction plays a decisive role in the demand for PVC. In the first quarter, the off-season effect of the real estate market weakened, the supply area of commercial housing in key cities continued to grow, and transactions remained active. In the first quarter, the national commercial housing sales area and sales amount both reached new highs in the same period of recent years, the market as a whole turned better, and other indicators of the industry also improved significantly. From the perspective of terminal demand, PVC just needs to maintain a steady rising trend.
In addition, rising costs also support PVC prices to a certain extent. Since March, the policy level has increased its influence on the calcium carbide market. Inner Mongolia Autonomous Region printed and issued "several safeguard measures to ensure the completion of the" fourteenth five year "energy consumption double control target tasks (Draft)". Under the influence of the policy of energy consumption double control, the construction of calcium carbide plants further declined, aggravating the tense situation of calcium carbide supply. The price of calcium carbide broke through last year's high and reached a record high. The price range of raw calcium carbide moves up obviously, and the production cost of PVC is increasing.
Manufacturers raise prices enough, downstream pressure highlights
PVC manufacturers prices follow futures prices more obvious, since the first quarter of this year, the general trend ± 50 liter discount, follow the main futures contract price. The price increase measures reflected that the upstream market of PVC was good and the seller's market was dominant. On the macro side, with the domestic economy further improving, the prosperity of upstream manufacturing and processing industry has continued to improve since the first quarter, and the recovery of downstream rigid demand and supply side constraints have become the base gas for manufacturers to raise prices.
The second quarter is the traditional maintenance season for PVC. At present, some enterprises have announced maintenance plans. In addition, Ningxia recently announced the goal of "double control", the problem of tight supply of calcium carbide will be more prominent, and the possibility of affecting the start-up of PVC enterprises in the later period will not be ruled out. The decline of PVC production in the second quarter is a high probability event.
PVC spot prices remain high, leading to a significant increase in downstream production costs and cost pressure. Although the prices of some downstream products also followed the rise, the rise was less than that of raw materials, the downstream production profits were squeezed, and some fell into losses. At present, the downstream operation is cautious, multi-dimensional just needs to purchase, mainly to make up for the right amount of bargain hunting, and the enthusiasm to catch up is not high, and some enterprises have a psychological resistance to the high price of goods. Although the mainstream price of PVC market is higher, the actual transaction rhythm of spot has slowed down.
In the face of the sharp rise of upstream raw materials, the downstream of PVC gradually accepted the price from resistance at the beginning, but the raw material inventory remained at a low level, and the downstream basically maintained the rhythm of callback purchase and high-level wait-and-see.
Will short-term diving change the long-term trend?
Yesterday, PVC prices showed a high adjustment trend, PVC prices fall is the market short-term adjustment behavior, it is expected that the lower space is limited. In 2021, the PVC market will be different from the past, the cost side will rise more obviously, and the scale of new production capacity will be limited to a certain extent; At the same time, the strong foreign market has a positive effect on domestic PVC.
PVC disk showed a significant drop, we think it is mainly affected by the rapid deterioration of the epidemic in India. As India is the world's largest importer of PVC, the rapid deterioration of its domestic epidemic may cause the collapse of its demand, which casts a shadow on the price of external PVC. At present, an important factor for PVC to maintain high price is the high external price which brings a large number of exports. But at present, due to the rapid deterioration of the epidemic situation in India, we can not rule out the possibility of domestic export reduction caused by the fall of external price in the later period.
The contradiction of PVC market is not prominent. Supported by the cost side, export orders and low inventory, the futures price will maintain a high operating situation. Although the market will fall in the short term, the adjustment space is expected to be limited, so the futures price will further break through. In the later stage, we need to focus on the device maintenance, export market trends, pre Festival downstream market stock situation and policy level influence.
High commodity prices are greatly affected by short-term sentiment, the recent overseas macro situation is not stable, PVC prices have dropped to a certain extent, but I'm afraid the inflection point of prices is not in the temporary rise and fall, PVC short-term diving is difficult to change the long-term trend. In plastics, PVC is obviously in the leading position this year, and PVC is still the first choice for downstream chemical products in the future.
