Five, inventory: inventory pressure is high
There is a seasonal rule of PVC social inventory: accumulation in the first quarter → decline in the second quarter → continuous inventory removal in the third quarter → replenishment in the fourth quarter. From January to March in the consumption off-season, PVC seasonal accumulation to the average level of previous years. However, from March to May, the speed of storage is slow, mainly due to weak domestic demand, relying on strong external demand to barely go to storage. From the middle to late May, PVC external demand slightly weakened, domestic demand is still weak, resulting in PVC began to accumulate.
According to the coal price of 800 yuan/ton, the coal cost of 1250 yuan/ton, 100 yuan/ton profit, electricity price does not rise 0.25 yuan, corresponding calcium carbide cost of about 3000 yuan/ton, according to the average profit level of 400 yuan/ton, calcium carbide price of 3400 yuan/ton, freight 400 yuan/ton, external mining calcium carbide price in 3800 yuan/ton, The corresponding cost of PVC in East China is 6800 yuan/ton, the profit fluctuates from -500 to +1500, and the PVC price fluctuates between 6300-8300.
Raw material end: calcium carbide in raw material end is difficult to provide cost support 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.
Supply side: 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. Therefore, although the level of the same period last year has declined, the PVC operating rate is still at a historical high level this year. Subsequent maintenance is reduced, and the PVC supply end may be under pressure.
Demand end: PVC belongs to the post-cycle commodities of real estate, and the terminal demand is linked to real estate. The apparent consumption of PVC has a high correlation with completion, slightly lagging behind the new starts. In 2022, domestic interest rate cuts combined with measures to stabilize growth were introduced, and strong expectations occurred several times on the demand side. Although exports grew faster than expected, domestic demand never recovered significantly, and weak reality outweighed strong expectations. Real estate slowly recovery in the second half of the year, PVC demand is expected to release limited space, and external demand may weaken, overall, the demand side is expected to improve but limited range.
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 price center of gravity or a weak trend, PVC is expected to fluctuate between 6300-8300, the market or continue to hype in the demand side of “strong expectations” and “weak reality”.
Post time: Dec-27-2022