Lead: PVC stage is now in the end of October after the rebound continued to be in the consolidation range, but in this week it rose beyond expectations, in November 24 on the day to break through 6000 yuan/ton integer threshold pressure, and in 25 again pulled to more than 6100 yuan/ton. The macro good rebound greatly exceeded the expectations of industry participants, but the spot fundamentals are still not good, market shipment pressure, East China basis continues to narrow, individual low water phenomenon.
PVC futures rebound after the position did not change significantly, the basis began to weaken
This week, the main PVC contract V2301 in the middle of the week, the highest rise of 3.83% on November 24, mainly by the national economic stability policy, the bank’s support for the real estate and the RRR cut expected to drive. But only in the day showed an increase in holdings, followed by 2 days of market again cautious, the overall holdings failed to change significantly. However, for the spot, the forward expectations are more important than the current reality. Under the situation that the spot fails to synchronize with the futures, the basis continues to weaken, and some current traders are difficult to trade.
In the later stage, PVC futures are difficult to get out of the unilateral direction when the fundamentals are weak. In the short term, the long-term expectations of V2301 are still strong, but the space above is affected by supply and demand, and is suppressed by the weekly line.
The market before and after the Spring Festival is expected to be poor, the overall transaction is still weak
Major domestic PVC traders have a good deal in spring and autumn, while summer and winter are relatively weak. And for 2022, the volatility of the transaction is larger, mainly due to the poor trend of the PVC market this year, and the market has become the mainstream rhythm of receiving goods at a low price. And in this week’s PVC price rise time, the market more in the initial price increase to receive goods, high prices when wait-and-see.
In the later stage, according to the practice, market transactions gradually weaken in winter, and both 2023 festivals are in January. Market participants have poor expectations about the Spring Festival, and shipments are weak under the background of high inventory.
Asian PVC market prices fell again in December, the impact of domestic PVC exports is obvious. The market is not expected to be good before and after the Spring Festival, and the overall transaction is still weak
The global PVC market declined significantly in the second half of 2022, mainly due to increasing global supply and weakening inflationary demand in Europe and the United States. The current mainstream price is $720-760 / ton FOB Tianjin Port, and export orders have also dropped to the freezing point. This week, the export contract ratio of production enterprises has been reduced to 0.1,600 tons. Some enterprises said that it is difficult to achieve without competitive advantage in price.
In the later stage, demand in Southeast Asia and South Asia improved month-on-month, and Taiwan Formosa Plastics sold well after its offer was issued in December. Japan, the Republic of Korea and the United States still have an impact on China’s export, and the late turnaround still depends on price for volume.
To sum up, although the domestic short-term rebound exceeded expectations, the fundamentals did not improve significantly for the time being, and the support point is still the expectation of the future. In the face of low demand in winter, the release of an additional 1 million tons of production capacity at the end of November will give a certain pressure to the market. However, it should be noted that the current inventory of downstream products enterprises is not high, especially the confidence in replenishment of raw materials comes from the continuous strengthening of prices, so PVC does not have the possibility of breaking before the macro falsification.
In the short term, measured from the price, the PVC price is supported by the cost and the industry loss support its downward space is not big, but from the global supply and demand pattern, the domestic PVC price will be depressed by the import price, it is expected that the price of PVC East China calcium carbide method 5 powder in December will run between 5600-6100 yuan/ton.
In the long run, in January 2023, considering the demand for destocking of domestic double sections and external pressure, the pattern of PVC internal worries and external problems has not changed. But the Fed rate hike cycle is coming to an end, there is a recovery expectation in 2023, and domestic policy expectations are strong after the two sessions, market prices may rebound after falling.
Asian PVC market prices fell again in December, the impact of domestic PVC exports is obvious. The market is not expected to be good before and after the Spring Festival, and the overall transaction is still weak.
Post time: Dec-01-2022