Analysis of PVC industry chain and market outlook
Polyvinyl chloride (PVC) is one of the five general-purpose resins. It is formed by free radical polymerization of vinyl chloride monomers. The consumption of PVC ranks third among the five general-purpose resins. As one of the important futures varieties of the chemical industry, PVC is firstly analyzed in this paper. Secondly, the main contract of PVC has experienced a sharp decline since June, and has entered the stage of range-bound consolidation. The demand side is still in a state of weak reality. The peak season in September has passed, and the increase in demand in October needs to be verified. If the increase in demand in October brings about a clear depletion of inventory, and the expected rebound in the price of calcium carbide on the cost side will bring bottom support, PVC is expected to be supported. Ushered in a small rebound. However, the current PVC supply side has a lot of new production capacity in the fourth quarter. If the demand side does not see a significant improvement, the inventory is likely to remain at a high level, and PVC will maintain a weak operation.
01. PVC industry chain – raw material end
First of all, a brief introduction to polyvinyl chloride, polyvinyl chloride (Polyvinyl Chloride, PVC for short), is a non-toxic, odorless white powder with high chemical stability and good plasticity. According to the method of obtaining vinyl chloride monomer, it can be divided into calcium carbide method, ethylene method and imported (EDC, VCM) monomer method (the ethylene method and the imported monomer method are commonly referred to as the ethylene method), among which the ethylene method is the majority in the world. , my country is mainly based on calcium carbide method PVC, the proportion of PVC produced by calcium carbide method accounts for more than 70%. Why is our country different from the international mainstream PVC production methods?
From the production process route, calcium carbide (CaC2, calcium carbide is an important basic chemical raw material, mainly used to generate acetylene gas. It is also used in organic synthesis, oxyacetylene welding, etc.) in the calcium carbide method accounts for about 70% of the production cost, One of the main raw materials of calcium carbide, orchid, is made of coal. The country has the characteristics of rich coal, poor oil and little gas. Therefore, the domestic PVC production process is mainly based on calcium carbide. It can also be seen from the trend of calcium carbide price and domestic PVC price that as the main raw material of PVC, the price correlation between the two is very high.
Internationally, the oil and natural gas route (ethylene method) is mainly used, so the cost and market price are not consistent.
Although my country has an anti-dumping policy on PVC, domestic manufacturers can still use the ethylene method to produce PVC by purchasing crude oil, ethylene and VCM monomers. Different PVC production processes have different impact paths on its cost side. Correspondingly, changes in the prices of crude oil and ethylene at the raw material end of the ethylene process will affect the production willingness of domestic PVC manufacturers by the calcium carbide process.
02. PVC industry chain – downstream consumption
In terms of demand, PVC downstream products can be divided into two types: hard products and soft products. Rigid products include pipe fittings, profiled doors and windows, rigid sheets and other sheets. Among them, pipes and profiles are the most important downstream demand, accounting for more than 50%. As the most important downstream, the demand for pipes is growing rapidly. Leading real estate and construction Enterprise orders are high, and the consumption of PVC raw materials has increased significantly. Soft products include floor covering materials, films, cable materials, artificial leather, shoes and sole materials, etc. In recent years, the export demand for PVC flooring has increased, which has become a new direction for PVC demand growth. In terms of terminal demand, real estate has become the most important area of the national economy that affects PVC, accounting for nearly 50%, followed by infrastructure, durable goods, disposable consumer goods and agriculture.
03. Market Outlook
From the perspective of the industrial chain, on the raw material side, the current prices of thermal coal and blue carbon are at high levels, and they drop in winter. If the cold winter recurs, the prices of thermal coal and blue carbon may rise at a high level, which will drive the price of calcium carbide upwards. At present, the price of calcium carbide is deviating from the price of thermal coal and blue carbon, mainly because the downstream PVC price of calcium carbide is weak. At present, calcium carbide manufacturers have gradually increased their losses under cost pressure. The bargaining power of calcium carbide manufacturers is limited, but in the case of the expansion of corporate losses, the possibility of calcium carbide factory shipments at a high price increases. This also provides bottom cost support for PVC prices.
In the fourth quarter, the supply recovery is expected to be strong. In the fourth quarter, there will be 1.5 million new PVC production capacity, of which 1.2 million are more certain. 400,000 tons of new production capacity will be released; in addition, Jintai has 300,000 tons of production time is still uncertain, in general, the pressure on PVC supply in the fourth quarter is relatively large.
The weak reality on the demand side and the anti-seasonal high inventory are the main reasons for the weak PVC price. Looking forward to the market outlook, the peak season of PVC traditional gold demand has passed. Although the demand in September has improved, it is still lower than expected. Demand is facing a test in October. If demand improves and the bottom cost is supported, PVC may rebound slightly. However, combined with the large increase in production in the fourth quarter and the large supply pressure, it is expected that PVC will maintain a weak operation.
Post time: Sep-27-2022