China PVC price analysis for the first half year

Since the second quarter of this year, the severe and complex situation at home and abroad made China’s PVC industry suffered a serious impact.  The cumulative domestic consumption from January to June was 9.4452 million tons, down 7.09 percent year-on-year.  By the middle of July, the price of carbide method 5 in East China fell to 6200 yuan/ton, the highest drop of 3200 yuan/ton, a decline of 34.04%.

There are three main reasons for the decline of PVC price: first, due to the concurrent impact of the epidemic in China, enterprises encountered problems such as poor transportation of raw materials and labor shortage, and the weak terminal market, which led to the decline of product sales.  Second, the conflict between Russia and Ukraine has seriously affected international trade exchanges and industrial chain supply, hindered the economic development of many Asian and European countries, and resulted in a decline in the overall sales of the industry.  In the first half of this year, the growth rate of investment in real estate development decreased by 5.4% year on year, and the sales area of commercial housing decreased by 22.2%. Consumer demand is seriously insufficient.

PVC exports in January-June 2022 were 1,234,700 tons, up 130,000 tons or 12.04% from 1.1 million tons in the same period last year.  The current international geopolitical changes combined with the continuous fluctuation of international oil prices, the export average price advantage ushered in growth opportunities.

At present, the recovery of domestic consumption is slow, the downstream demand is low, and the operating cost of enterprises is high. The downstream real estate industry has basically superimposed adverse factors in recent years, and the industrial development has encountered unprecedented huge difficulties.

Late, the domestic economy to the firm, real estate marginal improvement, stimulate domestic consumption, infrastructure projects positive and the policy of gradually fall to the ground, domestic PVC industry inventory or turning point in the third quarter, appears at the bottom of the short-term price, PVC prices have adjust space, but consider the external demand from abroad to raise interest rates and foreign are at increased risk of a recession and its limited upside.  PVC market price is expected to maintain a certain range of volatile trend.

Post time: Jul-27-2022