SunSirs: China PVC Market Continues to Decline in September, and May Gradually Stabilize in the Later Stage

According to the monitoring of the commodity market analysis system of SunSirs, the domestic PVC spot market continued the downward trend of last month in September, with prices continuing to fluctuate and decline, and the decline generally slowing down. As of September 30th, the average price of PVC in China was 4,606 RMB/ton, with a monthly price drop of 0.80%.

In the first half of this month, the PVC spot market maintained a range bound volatile trend. In the middle of the month, the spot price rebounded due to the short-term boost of the futures market. However, the good times did not last long. In the second half of the month, the supply and demand fundamentals returned to a negative impact, and PVC prices returned to the downward channel, but the decline slowed down significantly.

Overall, the market remained weak throughout September. Specifically, on the one hand, there is insufficient cost support, which is affected by weak upstream crude oil and ethylene. The futures market has been repeatedly suppressed by weak fluctuations, while spot prices have followed the market trend and fluctuated downwards. On the other hand, supply and demand pressure still shows certain pressure, and social inventory remains at a medium to high level. On the supply and demand side, the operating rate continues to be high, and production continues to increase. Although the contradiction of oversupply has slightly eased, the market is still in a stage of oversupply. At present, there is no signal of bottoming out and stabilizing in the market. Downstream procurement is mainly based on spot prices, with low enthusiasm for inquiry based procurement and a sluggish market atmosphere. The hanging order price is relatively low. Overall, it is still mainly driven by basic needs, and the trading atmosphere is average. As of September 30th, the mainstream price range of PVC SG5 electrical aggregate in China is mostly around 4,680-4,750 RMB/ton.

In terms of upstream calcium carbide, since September, the price of calcium carbide has generally rebounded, and the rebound force is strong. According to data monitored by SunSirs, the increase in calcium carbide in September was 8.9%. However, although there are positive factors from the cost side, the PVC market has not improved due to the suppression of supply and demand. Instead, it has been pushed up by upstream costs, which has brought certain pressure to enterprise profits. Overall, the supporting effect of calcium carbide has not been apparent in the short term, but it may bring some positive signals to PVC in the later stage due to cost transmission.

The PVC analyst from SunSirs believes that there is not much uncertainty in the supply and demand of PVC in the short term, mainly due to the sustained high operating rate of manufacturers and the high inventory levels of both enterprises and the market. The market should enter the destocking stage in the future, as there may be some opportunities for future demand due to the traditional peak consumption season of "golden September and silver October". It is expected that the amplitude of PVC prices will continue to narrow in October, and the market will gradually stabilize. The possibility of a temporary rebound in prices cannot be ruled out.

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