Raw material end: calcium carbide in raw material end is difficult to provide cost support in the first half of 2022. Calcium carbide supply is determined by its own construction and PVC demand. PVC rigid need to be unstable, drag the calcium carbide center of gravity down. Affected by the profit squeeze, this year’s calcium carbide operating rate compared to the same period last year has declined, the supply side has reduced.
Supply end: The PVC operating rate mainly considers its own profit. In the first half of the year, the profit of PVC production enterprises is good for most of the time. This year, the PVC operating rate is still at a historically high level. Subsequent maintenance is reduced, and the supply end may increase steadily.
Demand end: PVC belongs to the post-cycle commodities of real estate, and the terminal demand is linked to real estate. Real estate slowly recovery in the second half of the year, PVC demand is expected to release limited space, and external demand may weaken, the demand side is expected to improve but limited. In the second half of 2022, we estimate that PVC supply and demand may show a marginal improvement compared with the first half of the year, but the improvement brought by demand is limited, PVC may show a weak trend of shock, and the market continues to hype “strong expectations” and “weak reality” on the demand side.
First, market review
The PVC market in 2022 is dominated by strong expectations and weak reality at the demand end. We can divide the market in the first half of the year into six stages:
(1) In January, the central bank announced an interest rate cut, monetary policy easing still has room, and the market is optimistic about the first quarter of the construction force, PVC in the strong expectations of strong shocks;
(2) In February, weak reality dominated the price change, downstream demand was in the off-season, the recovery of construction after the holiday was slow, and PVC inventory pressure was high;
(3) In March, the surge of overseas crude oil led to the collective upward movement of bulk commodities. In the expectation of stable domestic growth, the boost of exports and recovery of domestic demand supported the rebound of PVC futures price;
(4) From April to May, due to the impact of the epidemic, the domestic demand was weak, the export was weakened, and the PVC futures price continued to fall;
(5) In early June, with the unsealing of Shanghai, the demand side is expected to recover;
(6) In the middle and late June, the actual situation was that the domestic demand was still not improved, the external demand was weak, the accumulation speed was accelerated, and the PVC futures price broke the level and fell.
Second, raw materials: calcium carbide cost support is insufficient
It is difficult to provide cost support for raw calcium carbide in the first half of 2022. Unlike 2021, this year’s calcium carbide limited electrical disturbance has weakened, and calcium carbide supply is determined by its own construction and PVC demand. PVC rigid demand is unstable, drag the calcium carbide center of gravity down, leading to losses in some calcium carbide enterprises, increased shipping pressure, the existence of price reduction to yield profit shipping behavior. Affected by the profit squeeze, this year’s calcium carbide operating rate compared to the same period last year has declined, the supply side has reduced. At present, the maintenance of PVC device is too much, resulting in a decline in demand for calcium carbide, calcium carbide profit pressure, operating rate decline, with the subsequent reduction of PVC maintenance device, calcium carbide demand is expected to increase, profit or repair, driving supply back up.
Calcium carbide is the main cost of charcoal, electricity and limestone. The supply and demand pattern of orchid carbon is loose, there is no disturbance such as double control of energy consumption, and the price fluctuates more with the coal price. At the same time of the demand pressure of downstream enterprises, coal enterprises are also under the cost pressure caused by the slow decline of raw coal.
Post time: Dec-23-2022