The trend of the domestic PVC market in 2019 is quite volatile and hard to predict.

According to data from SunSirs, the average domestic mainstream PVC price at the beginning of the year was 6,575 RMB / ton. At the end of the year (December 20th), the average domestic mainstream PVC price was 7,007.5 RMB / ton, up 6.58% during the year. Two of them rose sharply. The increase in the second and fourth quarters exceeded expectations, with the average price exceeding 7,000 RMB. The lowest point of the year appeared at the end of February to early March, and the lowest price was 6,300 RMB. On the whole, the PVC market in 2019 is cold in the season, and it is rising in the off-season.

Overall year, domestic PVC can be roughly divided into four waves.

The first wave is the low-level consolidation of PVC prices in the first quarter. The second wave is the large fluctuations in prices in the second quarter. The third wave is the fluctuations in prices from the third quarter to the end of October. The fourth wave is from November to the end of the year, with PVC price significantly increasing.

The first phase is from the beginning of the year to the end of March.

The domestic PVC market is in a low consolidation phase. Affected by the Spring Festival holiday, the atmosphere of the PVC spot market is deserted. Transaction prices are weak, and the operating rate of PVC manufacturers has decreased during the off-season. The actual inventory in the market is low, and the sales pressure is not great. The actual transaction atmosphere is not tepid. After the Spring Festival, the spot market atmosphere of PVC gradually recovered, and the market inventory increased. The main demand was still recovering. The actual transaction volume was not much and the price was stable.

Entering March, the weather is warmer, and infrastructure needs are gradually recovering. The spot market atmosphere of PVC has gradually improved. At the same time, the operating rate of PVC manufacturers is about 60%, and the supply is sufficient. The overall market is stable. In late March, there are tight supplies in East and North China. Therefore, the supply contracted, and acceptable demand led to a slight increase in manufacturers' quotations. At the same time, PVC futures rose in late March, pulling up spot market prices. Long and short factors in the market are intertwined, and the price of PVC fluctuates within the 6,300-6,800 range.

The second stage is from early April to the end of June, and the domestic PVC market fluctuated greatly.

There was a wave of "roller coaster". Entering the second quarter, the weather is picking up, downstream infrastructure needs are gradually recovering. The spot market PVC atmosphere is still acceptable. At the same time, the impact of the Dongxing accident and the upstream companies' centralized maintenance and other factors, PVC manufacturers have low inventory levels with no inventory pressure. Meanwhile, East and North China was in relatively tight supply. The supply contracted and acceptable demand caused manufacturers to quote higher prices.

At the same time, PVC futures continued to rise, a large amount of funds poured in, supporting the market to chase up and pulling up the spot trading market price. The overall rise broke through 7,000 RMB, reached a commanding high of 7,142.5 RMB in mid-May, and then began to fall. With the peak period for most companies overhauling, the operating rate has gradually recovered, and the overall market inventory has improved. And the downstream infrastructure construction demand is general. The actual transaction volume is low. The downstream buyers are mainly wait-and-see attitude. The orders are just to meet the just-in-demand procurement. The market transaction atmosphere is deserted, resulting in a weak domestic PVC market week.

The third stage is from early July to the end of October.

The PVC industry gradually shifts from the low season to the peak season, and the prices fluctuate. The seasonal trend of spot in PVC period is particularly obvious. In early July, futures prices continued to rise. So did spot price. The spot trading atmosphere improved, and the transaction was stable, causing the price of PVC to fluctuate.

In August, PVC spot inventory was relatively low, but East China's inventory was still higher than last year. Enterprises produced as needed, and sales pressure was not great, which supported the price increase.

In late August, futures prices fell first and then rose, driving the spot price to follow the trend. The actual spot trading atmosphere was tepid. Due to factors such as environmental protection and poor exports of downstream product companies, the operating rates and inventory of most factories were all not high, just need to maintain the procurement. The transaction volume has not been heavy. The PVC market maintained an interval trend.

“Gold September and Sliver October” is the traditional industry peak season, as well as corporate maintenance, market supply and other favorable support. But the PVC market has not seen a significant increase. The market is not good. During the period, the Saudi oil attack boosted the futures market, but environmental protection was limited. The downstream started low and demand was reduced. The PVC market was not busy during the peak season, merchants were giving up shipments, and transportation costs increased. The market price was settled down at mid or low range. Long and short positions are intertwined, and the peak season is cold, and the PVC market is less than expected.

The fourth stage started from November to the end of the year, and the PVC industry rose sharply during the off-season.

Entering November, the futures market accelerated the subsidy of water, increasing positions, and the trend of PVC futures was stronger. The PVC spot opened up the channel due to the impact of futures. In the off-season of consumption, PVC continued to rise and became popular all the time, mainly due to the shortage of supplies and the continuous decline in social inventory. Since October, seasonal maintenance in some areas has exceeded expectations, and the time has been long and concentrated. The inventory of all factories has begun to decrease. At the same time, some manufacturers have actively taken the opportunity to ship due to their pessimistic mentality. Among them, there are many traders who have taken the opportunity to promote and take arbitrary. The PVC market is not off-season. Prices are rising steadily, and the heat is not diminishing, breaking through 7,000 RMB.

In December, PVC futures surged weakly recently and began to fall. The future dominated contract has been converted from 01 to 05. The 01 contract has a large price difference with the spot, and some predictions will be repaired. The spot market of PVC is greatly affected by futures, and the decline in the market has driven the spot market down steadily.

In the fourth quarter, the northern region entered the heating season. It was the off-season of the industry. End customers such as real estate and infrastructure construction started to reduce demand for PVC. At present, the spot of PVC is still tight. Social inventory in East China and South China continues to decline. Downstream factories have a tired state of mind, enthusiasm for purchasing is not high, and they are often in conflict. The actual trading situation is mediocre.

With the northward shipment of goods to the south and the centralized overhaul of production enterprises, the industry's starting load has increased. And the increase in supply has played a role in alleviating the contradiction between supply and demand. Quotations of some manufacturers are now slightly loose, and the downward adjustment of the PVC market is inevitable.

Equipment maintenance: In 2019, the supply of PVC was tight, mainly due to the decline in the start-up level of the equipment compared to last year. The seasonal maintenance in the fourth quarter exceeded expectations, and the time was long and concentrated. As a result, the spot of PVC in the market was scarce. At present, the annual overhaul is basically completed and the start of construction has been improved. The market supply and demand have eased. A small number of companies have reduced their loads, and the market has gradually recovered. The PVC supply pattern may change.

Social inventory: In 2019, the inventory is slow. Generally, PVC is gradually removed from the warehouse in the second quarter of each year. However, due to factors such as security accidents and slowdown in real estate growth and poor macro environment, PVC inventory is high.

In the case of poor demand in the fourth quarter, destocking continued slowly until the second half of the year. Around November, destocking in South China was faster than in East China.

Downstream demand was still acceptable, the supply was extremely tight, and PVC prices rose sharply. Due to the pessimistic mentality of the manufacturers in the early stage, the low prices allowed profits. The enthusiasm for downstream procurement rose, and the inventory fell rapidly, reaching a low level for the year. The inventory deceleration at the end of the year has slowed down, and subsequent supplies have increased; coupled with the weakening of downstream demand, the PVC market has steadily declined.

Market Forecasting

SunSirs’ PVC analysts believe that the trend of PVC in 2019 will be erratic. In the peak season of the industry, the price of PVC will fluctuate. And in the off-season, the price of PVC will rise more than expected, and profits will surge.

Moreover, in the warm winter of this year, the supply of PVC in the real estate construction area is tight. And the long-term or strong operation speed is maintained at a high level of about 9%. Some of projects stopped much later than others. Therefore, the demand is acceptable, giving bullish news for PVC-made construction material of real estate sectors.  

With the end of the year, the factory holiday ahead of schedule, the company was not active in stocking years ago. They basically maintained just the need. Meanwhile, faced with high prices of PVC for a long time, and the downstream product industry began to appear tired. Due to the impact of air pollution during the heating season in the north, construction has been restricted in many places. Some downstream companies have cut production and stopped working, and their profits have been declining.

Taken together, the PVC market has a general macro environment, and various negative factors such as weak downstream demand and gradual increase in supply sources are expected.

It is expected that in the short term, the weak trend of PVC is inevitable, and prices may be slightly adjusted back. However, the tight supply and demand pattern is short. It is difficult to reverse in the future, and the strengthening of infrastructure construction in 2020 may boost the PVC market. In the future market, we need to pay attention to the impact of macroeconomics and futures.

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