Industry information: Maintain high levels, PVC supply pressure may not decrease

Upstream enterprises have started operations stably, and industry inventories continue to be under pressure. Although downstream operations have increased slowly, purchase intentions are cautious, and most of the previous inventory is consumed. The short-term Chinese PVC market is expected to operate weakly.

With the continuous expansion of domestic PVC production capacity, the market price has been suppressed to varying degrees. Although there was a rise last week, the growth of downstream demand is difficult to follow up with the increase in supply.

1. PVC market is oversupplied

In the first quarter of 2023, the supply and demand relationship in the PVC market is still in a state of slightly oversupply. In January, due to the Spring Festival holiday, the downstream is basically in a state of shutdown, and the consumption is significantly reduced. The supply and demand gap in January is 744,700 tons, high inventory pressure more obvious. Entering February and March, with the continuous increase in the downstream construction, enterprises purchased at low prices, which relieved part of the inventory pressure, but the pressure on the short-term supply side will not decrease.
 

2. Weakened cost support

In terms of raw material calcium carbide, the supply of calcium carbide is sufficient in the market, the enthusiasm for downstream construction is not high, and normal operation is maintained. The accumulation of unloaded trucks is high, the problem of vehicle circulation is prominent, and the demand is insufficient, which has become the focus of the contradiction between supply and demand of calcium carbide. It is expected that the price of calcium carbide will remain weak .

3. Production enterprises start to work lower

Operating rate of PVC production enterprises

Entering February, the operating rate of PVC enterprises has gradually increased. Judging from the operating situation, there are not many overhauls of PVC production equipment, and the operating rate has steadily increased, and the supply is sufficient. According to statistics, PVC maintenance in February 2023 will involve production capacity of 2.17 million tons, a decrease of 38% from January. As of February 16, the capacity utilization rate of domestic PVC production enterprises has increased by 1.40% from the previous month to 77.54%, which is a year-on-year increase of 3.41%.

4. Enterprise inventory decline

Recently, some companies have shipped at low prices, and the export volume is acceptable. The inventory of enterprises has been destocked for the first time since the Spring Festival, but it is still the highest point in the past three years in terms of year-on-year comparison. Regarding the market outlook, from the supply side, there are few maintenance companies in the near future and it is difficult to boost the market. The social inventory is under greater pressure to destock, and the market still needs support from downstream demand. On the whole, the upstream enterprises started to work stably, and the industry inventory continued to be under pressure. Although the downstream started to increase slowly, the purchasing intentions were cautious, and most of the previous inventory was consumed. The short-term domestic PVC market is expected to be weak.
 

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