Entering 2023, due to the downturn in various regions, the global polyvinyl chloride (PVC) market still faces uncertainty. Most of the time in 2022, the prices of Asia and the United States showed a sharp decline in prices and bottomed out in 2023. Entering 2023, in various regions, after China’s adjustment of the epidemic prevention and control policy, the market expects to respond; in order to fight inflation, it may further increase interest rates and curb the demand for domestic PVC in the United States. In the case of weak global demand, the Asian region and the United States, led by China, expanded PVC exports. As for Europe, the region will still face high energy prices and the problem of inflation, and it is likely that there will be no sustainable industry profit margins.
Europe faces economic recession influence
Market participants predict that the emotions of European alkali and PVC markets in 2023 will depend on the severity of economic recession and their impact on demand. In the chlorine industry chain, the profit of the manufacturer is driven by the balance between alkali and PVC resin, and one of the products can make up for the loss of another product. In 2021, the demand for these two products is very strong, of which PVC is dominant. However, in 2022, due to economic difficulties and high energy costs, in the case of soaring alkaline prices, chlorine -based production was forced to cut load, and PVC demand slowed down. The problem of chlorine production has led to the tight supply of alkali -roasted supply, attracting a large number of US goods orders, and the export price of the United States has once risen to the highest level since 2004. At the same time, the spot price of European PVCs fell sharply, but it still maintained the highest price in the world at the end of 2022.
Market participants predict that in the first half of 2023, the European alkali and PVC markets will be further weak because consumer terminal demand will be suppressed by inflation. In November 2022, an alkaline traders said: “High prices of alkalinity are being damaged by demand.” However, some traders said that the alkali and PVC markets in 2023 will tend to be normalized. The price of high -fever and alkali.
The decline in US demand promotes exit
Market sources said that in 2023, the United States integrated chlor -alkaline manufacturers will maintain high -operating load production and maintain strong alkaline prices, and the weak PVC price and demand are expected to continue. Since May 2022, the US PVC export price has fallen by nearly 62%, and the export price of alkaline exports from May to November 2022 has risen by nearly 32%, and then began to fall. Since March 2021, the American roasting capacity of the United States has decreased by 9%, mainly due to a series of suspension of production by the Olympic company, which has also supported the strengthening of alkaline prices. Entering 2023, the strength of alkaline -roasted prices will also weaken, and of course the decrease may be slower.
West Lake Chemical is one of the American PVC resin producers. Due to the weak demand for durable plastics, the company has also reduced the production load rate and expanded its export. Although the slowdown in the pace of interest rate hikes may lead to rising domestic demand, market participants said that global recovery depends on whether China’s domestic demand has rebounded.
Pay attention to the recovery of Chinese potential needs
The Asian PVC market may rebound in early 2023, but market sources said that if China’s demand has not fully recovered, recovery will still be restricted. The price of Asian PVCs fell sharply in 2022, and the offer in December of that year hit the lowest level since June 2020. Market sources said that the price level seemed to stimulate spot purchase and improved people’s expectations of the decline.
Sources also pointed out that compared with 2022, the supply volume of Asian PVC in 2023 may maintain a lower level, and the operating load rate is reduced due to the upstream cracking output. Trade sources predict that in early 2023, the original US PVC cargo flow entering Asia will slow down. However, American sources said that if China’s demand rebound, the decrease in China’s PVC exports may trigger an increase in US exports.
According to customs data, China’s PVC exports reached a record of 278,000 tons in April 2022. In the later 2022, China’s PVC exports slowed down. Due to the decline in US PVC export prices, Asian PVC prices fell and shipped costs plummeted, which resumed the global competitiveness of Asian PVC. As of October 2022, China’s PVC exports were 96,600 tons, the lowest level since August 2021. Some Asian market sources said that with China’s adjustment of epidemic prevention, China’s demand will rebound in 2023. On the other hand, due to high production costs, the operating load rate of China’s PVC plant at the end of 2022 has dropped from 70%to 56%.
Inventory pressure increases PVC and still lacks driving
Driven by the market optimistic expectations before the Spring Festival, PVC continued to rise, but after the year, it was still the off -season of consumption. The demand has not been heated for the time being, and the market has returned to the weak fundamental reality.
Fundamental weakness
The current PVC supply is stable. In late November last year, the real estate policy began, and the epidemic control was optimized. It gave the market more positive expectations. The price continued to recover, and the profit was restored simultaneously. A large number of maintenance devices gradually resumed work in the early stage and increased the start rate. The current PVC operating rate is 78.5%, which is at a low level at the same period compared to previous years, but the supply is relatively stable in the case of increasing production capacity and long -term insufficient demand.
In terms of demand, from the perspective of last year, the downstream construction was at the lowest level last year. After the epidemic control is optimized, the peak of the epidemic has occurred, and the off -season demand in winter has further declined before and after the Spring Festival. Now, according to seasonality, it takes one or two weeks to start after the Spring Festival to start to improve, and the construction site requires the rise of temperature. The New Year this year is earlier, so the north needs a longer resumption time after the Spring Festival.
In terms of inventory, East China inventory continued to maintain high last year. After October, the library was due to the decline in PVC, the decline in supply, and the market’s expectations for future demand. Coupled with the downstream stop work of the Spring Festival, the inventory has accumulated significantly. At present, East China and South China PVC inventory is 447,500 tons. Since this year, 190,000 tons have been accumulated, and the inventory pressure is large.
Degree of optimism
The restrictions on the construction of construction sites and transportation are canceled. The real estate policy is continuously introduced at the end of last year, and the market is expected to recover real estate demand. But in fact, there is still a relatively large uncertainty now. The financing environment of real estate enterprises is relaxing, but whether the company’s funding is developing new real estate or accelerating the construction of construction. More closely. At the end of last year, we expect that the real estate construction will improve this year. From the perspective of the insurance, there is still a small gap between the actual situation and expectations. In addition, the confidence and purchasing power of home buyers are also critical, and it is difficult to boost house sales. So in the long run, PVC demand is still expected to recover, rather than greatly improved.
Waiting for the inventory turning point appears
Then, the current fundamental aspect is in a state of empty, and the inventory pressure is high. According to seasonal, the inventory enters the seasonal destination cycle also needs to wait for upstream PVC manufacturers to enter spring maintenance, supply decline, and comprehensive improvement of downstream construction. If the inventory turning point can be ushered in the near future, it will play a strong role in recovering PVC prices.
Post time: Feb-16-2023