PVC enters the low season

In mid-August, the domestic PVC market experienced an inflection point. The mainstream prices of calcium carbide and ethylene products continued to fall slightly from 7,900 yuan (ton price, the same below) and 8,900 yuan. In particular, at the end of September, the market was affected by many uncertainties such as the turmoil in the international economic environment, long National Day holidays, uncertain domestic expectations, and shifting downstream demand into the off-season. PVC prices fell to a new low during the year, and the price of calcium carbide fell to 7,300 yuan. Below, the price of ethylene fell back to about 8,000 yuan. Obviously, in the case of high prices of raw and auxiliary materials, energy, and transportation, related companies will fall into months of difficult production and operation.

The decline in international crude oil, which has caused exports to be blocked Since the European debt crisis last year and the decline in the credit rating of major western countries, global concerns about the international economic situation in the future have been triggered, resulting in a decline in the prices of bulk commodities and demand. Among them, international crude oil prices fell sharply. The price of each barrel was about 120 dollars at the beginning of the year. In mid-August, it fell below the 80-mark mark. At the beginning of October, it reached a minimum of 75 dollars, and it now rebounded to 85 dollars. This is undoubtedly an advantage for the foreign PVC industry. The lower crude oil price is beneficial to the ethylene process, which makes it more competitive. In the domestic PVC industry, calcium carbide process accounts for about 70%. In recent years, affected by the increase in electricity and transportation prices, the price of calcium carbide remains high, and it is difficult for companies to resist and absorb the rising cost of manufacturing. At the same time, lower crude oil prices have also caused domestic companies to face new unfavorable conditions. On the one hand, exports have been hindered by cost constraints. On the other hand, they are constantly worried about the impact of imported products. Statistics show that in the first half of this year, China's total exports of PVC powder totaled 269,000 tons, which was a year-on-year increase and averaged 45,000 tons per month, while exports in August fell to 26,000 tons, a significant drop. Although domestic PVC prices are bearish, domestic product prices are higher than export prices, coupled with weak demand in foreign markets, which has caused exports to be blocked.

In the past two years, the government has used fiscal, land, and financial policies to suppress the price of real estate, resulting in a light market and wait-and-see atmosphere. strong. This has led to an increase in the supply of existing homes. On the other hand, it has directly affected the confidence of real estate developers, and the willingness to take land and expand supply has been greatly reduced. This has inevitably led to a sharp drop in the number of new construction projects in various regions. According to real estate industry estimates, the current operating rate of new real estate during the year is less than 60% when it is hot. It can be described as "city gate fire and fish." PVC is widely used in various types of pipes, profiles, cable materials, etc., and the largest downstream users of these products are the real estate industry. Obviously, the real estate industry is in a sluggish state. In addition, it has entered the autumn season. In particular, the vast northern regions will have a frosty period of nearly half a year. Many small and medium-sized material processing industries are forced to stop production or to stop production. Therefore, in the face of the bleak operation of the entire real estate industry, the demand for the PVC downstream processing industry has been drastically reduced, resulting in a weakening of its price support.

The net increase in production capacity exceeded the market's reasonable demand. In the past 10 years, the development of the domestic PVC industry has been in full swing. Despite the growing concern of industry insiders, domestic efforts to squeeze the "two high" industries and eliminate backward production capacity have not diminished, but the industry expansion The momentum to increase production is still strong. Industry data show that PVC production capacity from 3.8 million tons in 2003, after continuous large-scale expansion, all the way to the end of the "Eleventh Five-Year" close to 20 million tons. For this reason, profound changes have taken place in the industry structure, from the large amount of imports in the early years, to the subsequent basic balance of production and sales, and to the serious imbalance between supply and demand. As the new production capacity greatly exceeds the obsolete production capacity that has been eliminated, the net increase in production capacity has increased the degree of market imbalance. This result will inevitably drive the industry's driving rate to remain low at about 50% for a long time. Once the market appears to have a good market and product prices have risen, the idle devices will all drive, which will lead to a rapid decline in prices.

Therefore, in the context of the market's gloomy expectations, the processing companies and distributors will be indifferent to inventory, and the situation of low PVC prices will be difficult to change.