In January 2026, the main PVC futures contract staged a V-shaped rebound. During the first half of the month, prices consolidated at elevated levels before retreating amid market disruptions caused by expectations surrounding differential electricity pricing policies. In the latter half, as market sentiment improved and the broader chemical sector strengthened, substantial capital inflows propelled prices to surge rapidly. The V2605 contract peaked at 5,125 RMB/ton, hitting a three-month high. By January 30, the V2605 contract closed at 5,063 RMB/ton, marking a monthly gain of 5.37% and a monthly increase of 258 RMB/ton.

In the spot market, prices across all regions rebounded in January, with regional price increases largely synchronized: - The average price of PVCSG-5 in the Changzhou market was reported at 4,780 RMB/ton, up 280 RMB/ton (6.22%) from early January. - The average price of PVCSG-5 in the Shanghai market was reported at 4,780 RMB/ton, up 290 RMB/ton (6.46%) from early January. The average market price in East China was reported at 4,840 RMB/ton, up 270 RMB/ton or 5.91% from early January. The increase in average market prices across all regions exceeded the valuation of the main PVC futures contract, leading to a slight narrowing of the basis. Industrial clients may consider hedging opportunities at elevated levels.

I. Supply Side: Production Remains Elevated

The industry's expanding production capacity base has sustained high output levels. Despite weekly PVC operating rates holding at relatively low-to-mid historical levels, output remains substantial against the backdrop of high capacity. Weekly production throughout January reached absolute highs over the past five years, indicating persistent supply pressure in the short term.

Plant operation data indicates that domestic PVC operating rates remained stable in January but declined significantly year-on-year. As of January 30, the weekly PVC operating rate reached 78.93%, up less than 1 percentage point month-on-month but down 2.98 percentage points year-on-year. Concurrently, weekly output reached 483,300 tons, up 1,200 tons month-on-month and 9,000 tons year-on-year, indicating persistently high industry supply.

II. Overseas Demand: Strong Export Performance

Regarding trade, China—a net exporter of PVC—accounted for approximately 18% of apparent consumption through exports in 2025. In December 2025, China's PVC imports totaled approximately 24,600 metric tons, marking a month-on-month increase of about 56.69% and a year-on-year rise of approximately 12.84%, remaining at a relatively low level over the past five years. For the full year of 2025, cumulative PVC imports reached roughly 226,700 metric tons, up about 2.58% compared to 2024, yet still positioned at a relatively low level over the past five years.

China's PVC exports in December 2025 reached approximately 314,100 metric tons, marking a month-on-month increase of 38,800 metric tons (about 14.1%) and a year-on-year rise of approximately 35.04%, reaching a high point over the past five years. Cumulative PVC exports for the full year of 2025 reached approximately 3.823 million tons, marking a year-on-year increase of about 46.01%. China's PVC exports have shown a trend of steady annual growth over the past five years.

In January 2026, influenced by the cancellation of export tax rebate policies, the market witnessed short-term export rushes. PVC export orders increased as upstream enterprises and traders actively pursued exports. It is anticipated that PVC exports will continue to grow month-on-month in the first quarter of 2026.

IV. Inventory: New Record Highs

Regarding inventory, domestic PVC inventories showed a “continuous accumulation” trend in January. As of January 30, inventories had increased for five consecutive weeks, with high inventory levels becoming the core factor suppressing price rebounds. Currently, small-sample social PVC inventories stand at 584,700 metric tons, up 8,200 metric tons month-on-month (a 1.42% increase) and up 179,900 metric tons year-on-year (a 44.44% increase). Large-sample social inventory reached 1.2064 million tons, up 28,900 tons (2.45%) month-on-month and 454,900 tons (60.53%) year-on-year. This sustained inventory buildup reflects the current supply-demand imbalance in the industry, with the “strong supply, weak demand” pattern unlikely to reverse in the short term.

V. Summary: Fundamentals Drive Logic Reassessment

In January 2026, the PVC futures market exhibited synchronized upward momentum across both futures and spot markets. Futures prices broke through resistance levels consecutively, hitting a three-month high; spot prices surged even more sharply than futures, narrowing the basis slightly. January's rebound was fundamentally driven by sentiment recovery amid undervaluation and capital inflows, fueled by the overall recovery in the chemical sector, cost relief from rising crude oil prices due to geopolitical tensions, and short-term export stimulus. However, the upward momentum at the industrial level remains fragile.

Looking ahead, the PVC market's oversupply structure is unlikely to fundamentally reverse in the short term. Digesting high inventories requires time and favorable conditions. In the near term, the sentiment-driven rebound has already partially restored market valuations, diminishing further upward momentum. Without follow-through from domestic demand, prices will face renewed pressure, likely transitioning into a high-range consolidation or corrective decline pattern. The medium-to-long-term industry fundamentals of “strong supply and weak demand” dictate extremely limited upside potential for prices, making sustained upward trends highly challenging.

Overall, market participants should closely monitor signals of a turning point in social inventories, the latest developments in real estate policies, and actual export data changes following the cancellation of export tax rebates.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.