SunSirs: China EVA Market does not Rise but Falls in the Traditional Peak Season

In September, the domestic EVA market remained stagnant and fell, with a significant decline in spot prices in the second half of the month. According to the Commodity Market Analysis System of SunSirs, as of September 30th, the average ex factory price of EVA in China was 13,166.67 RMB/ton, with a price drop of 5.95% compared to the beginning of the month.

Cause analysis

In terms of raw materials, since early September, the overall supply of ethylene at the raw material end has gradually increased. The supply of inventory at the port is stable, while overseas sources of goods are increasing. The cost side of the petroleum market has been strengthened due to the strong impact of crude oil fluctuations, coupled with the release of domestic stock demand in September. Therefore, the ethylene market has a long short game within the range, and the market is relatively stable and strong;

In terms of vinyl acetate, the industry started at a low level at the beginning of the month, but there were additional sources of imported goods. In the latter half of the year, the load gradually rebounded and the tight supply pattern eased. At the same time, the remote upstream crude oil has boosted, coupled with the demand for pre holiday stocking, vinyl acetate is basically facing a good trend. In September, on exchange trading focused on delivering orders, but in late October, trading slowed down and prices remained stable and strong. During the cycle, the market for EVA raw materials remained strong, and the support for the EVA market was moderate.

In September, the resumption of installation and maintenance of domestic EVA enterprises were mutually evident, and the industry's operating rate was mainly characterized by high fluctuations. The high point of overall enterprise load occurred in the second week, about 88%. Due to a significant increase in supply in the first half of the month, supply pressure quickly rose. Afterwards, the operating rate fluctuated and reorganized, with an average load of about 80.07% within 30 days. In terms of production, it is generally the same as last month, with a monthly production of around 170,000 tons. The pressure on factory inventory is gradually increasing, and manufacturers are loosening their factory pricing. The mentality of traders has weakened, following the drop in factory prices. EVA suppliers have weak support for spot goods.

September is the traditional peak season for EVA consumption, but this year's "Golden Nine" domestic EVA market stock boom has not arrived as scheduled. At the beginning of the month, photovoltaic companies were able to smooth out the decline in EVA consumption in other directions by taking on the preliminary stage of stocking market. However, as the positive demand for photovoltaic film gradually wears out, the negative trend of long-term weak consumption of foam shoe materials begins to dominate. The synchronous weakening of cable material delivery has led to a gradual collapse of the EVA demand side. At present, the follow-up of terminal enterprises is lagging behind, and there is limited trading on the market. The buyer has a strong wait-and-see atmosphere and is resistant to high priced sources of goods.

Overall, the EVA market did not perform well during the peak season in September and fell against the trend. Although the raw material market remains strong in supporting EVA spot sales, weak downstream demand is dragging down the market. At the same time, the industry's load continues to be high, and supply pressure is gradually rising. Manufacturers have loosened pricing, and traders have followed suit. On the other hand, the continuous rise of EVA in July and August has to some extent overdrawn the market, causing bulls to be empty in September, and the benefits are difficult to find.

In summary, the EVA market in September was also affected by increased supply pressure, lagging demand follow-up, and high price positions, resulting in a stalemate and a decline in the market. In the future, after the Double Festival, terminal enterprises generally focus on digesting early inventory, and there is little possibility of an improvement in their willingness to receive goods. The expectation of improving EVA fundamentals is not strong, and it is expected that the EVA market will continue to be weak in early October. It is recommended to closely monitor the industry's supply and demand situation.

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