Last week (2.2-6), the domestic PVC market prices continued to rise. According to the Commodity Analysis System of SunSirs, the SG-5 weekly increase of PVC carbide method was 1.10%. The rise in the market is mainly driven by the futures market, with insufficient fundamental support, presenting a differentiated pattern of "strong market and weak spot". As the weekend approaches, the overall sentiment of the commodity market has subsided, and most commodity prices have experienced weak pullbacks, causing the PVC market to stop rising and fall back. According to data from SunSirs, the current market price of PVC carbide SG-5 in East China is in the range of 4,750-4,800 RMB/ton.
Supply and demand side: Last week, the PVC spot market had weak supply and demand, but driven by the futures market, the spot market surged at the beginning of the week. But the supply and demand performance is weak, downstream demand is weak, and export volume has also declined. In addition, on the supply side, the PVC operating rate slightly decreased last week, with some companies operating at rates below 50%. So, as the futures market came under pressure over the weekend, PVC prices experienced a pullback. In addition, this is mainly based on the decrease in trading volume and the shift in market sentiment.
In terms of inventory, during the Chinese New Year in Linji, the festive atmosphere is gradually strengthening, downstream procurement has slightly slowed down, and social inventory remains at a medium to high level. Considering the current large basic inventory, the PVC spot supply side still maintains a relatively abundant level.
Cost side: Last week, the price of calcium carbide rebounded from a low level, and the market returned to an upward trend. According to the monitoring of Business Society, the weekly increase of calcium carbide last week was 0.39%. The increase in downstream procurement volume has a certain stimulating effect, and the cost still has advantages, which provides support for PVC.
Supply side: slight increase in operating rate, moderate increase in supply pressure
This week, the domestic PVC industry is expected to see a slight rebound in production, mainly due to the gradual resumption of maintenance equipment - Fujian Wanhua, Shandong Hengtong and other equipment are facing restart, leading to an increase in supply expectations. However, overall, as the Spring Festival approaches, most enterprises will maintain their current pace of operation and will not experience large-scale expansion of production. The supply pressure will show a moderate increase, and the suppression effect on prices will be limited.
Demand side: Domestic demand enters off-season, export expectations shrink
In terms of domestic demand, downstream PVC enterprises in China will gradually enter a shutdown and holiday mode, with a continuous decline in operating rates and further contraction in terminal procurement demand, making it difficult to effectively support spot prices; In terms of exports, the PVC contract price for March in the Asian market will be officially released next week. Currently, the market has a strong wait-and-see attitude, and foreign trade enterprises are mostly holding a waiting attitude. It is expected that the number of export orders will continue to decrease, making it difficult to alleviate domestic inventory pressure.
In summary, SunSirs believes that the PVC market will gradually enter the adjustment stage before the Spring Festival holiday this week, with a slight increase in operating rates and a continuous weakening of demand forming a game. The overall cost side will remain stable, and the sentiment of the futures market will tend to be flat. It is expected that the market will mainly adopt a wait-and-see approach to stabilizing prices, with narrow fluctuations in prices. The focus will be on factors such as the resumption of production of maintenance equipment and the pace of downstream procurement.
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