PVC market conditions

1, policy changes, increase the cost of PVC prices

Starting in late July 2016, the Central Environmental Protection Inspection Group entered the northwestern region to inspect environmental protection due to calcium carbide (currently 80% PVC production in China is dominated by calcium carbide. Therefore, the price trend of calcium carbide seriously affects the price trend of domestic PVC. ) The production of energy is huge and the environmental pollution is serious. Therefore, it has become the focus of the environmental protection inspection team. Under the pressure of environmental protection, the producers of calcium carbide and polyvinyl chloride in Inner Mongolia were forced to restrict production and shut down, leading to a shortage of calcium carbide in the short term, and the quotations continued to rise. Individual production enterprises reduced the start-up load to maintain production, affecting the supply and demand of domestic PVC, making manufacturers continue to pull up prices. At present, calcium carbide quoted price remains high, the formation of support for the price of PVC in the short term is difficult to have a big drop, coupled with the steady rise in the price of coal and blue carbon, PVC will continue to escalate late.

In addition, the rise in road freight also affected the production cost of PVC. On August 18, 2016, the Ministry of Transport and the Ministry of Public Security jointly issued the "Circular on Issuing the "Special Action Plan for the Remediation of Illegal Overloading of Highway Trucks", starting from September 21 this year and ending in August 2017. Carry out key rectification, severely crack down on illegal violations such as over-limit overloading and forced rushing of highway trucks, and strictly implement the national standard “Outline size, axle load and quality limits for automobiles, trailers and car trains”. That is, transportation vehicles cannot carry goods. Super total quality of 49 tons, a height limit of 4 meters or less. The relevant person expects that when the road freight rates increase will be around 30 to 50 yuan / ton. At present, the policy has just been implemented, the market is waiting to wait, part of the automobile transportation is suspended, and restrictions are imposed on the downstream demand side. The arrival of the market is reduced. Some manufacturers have indicated that compared with the previous period, the number of transported goods has decreased, but the freight rate has become higher. . Therefore, the increase in transportation costs can only be added to the PVC quotation, so that the price of PVC will continue to increase in the short term.

2. Inventories are low, demand increases, and supply exceeds demand to promote PVC prices

Affected by the state's environmental protection inspection, some of the PVC factories with self-provided calcium carbide plants were forced to restrict production or shut down the calcium carbide workshop, leading to a drop in operating rates in the short term, tight supply of calcium carbide, reduced shipments from manufacturers, and reduced overall social inventory. At the beginning of September of this year, the G20 summit was held in Hangzhou, rail freight was suspended, and Hangzhou market transactions basically stagnated. In normal trading in South China, traders frequently replenish their stocks, and their sentiment is high. When the summit is over, downstream product manufacturers in Hangzhou will resume construction. The East China market will experience a small peak in replenishment in the short term, resulting in further shortage of supply. After a certain period of production, downstream product manufacturers in South China and East China have basically consumed upfront inventory. The recent increase in PVC prices has prompted some traders and product manufacturers to stock up on a large number, or for their own use, or to prepare to make profit later when they sell at higher prices. These factors further increase the price of PVC.

From the downstream market demand, profiles, pipes, doors and windows accounted for 55% of the downstream consumer market of PVC. Therefore, the real estate market demand has seriously affected the start-up and quotation of the upstream PVC manufacturers. According to statistics, from January to February 2016, the year-on-year increase in real estate investment increased from 2.5% in December 2015 to 4.8%; in March, it accelerated to 8.2%. From January to August 2016, the country's newly-built housing area was 1,106.34 million square meters, a year-on-year increase of 12.2%; the housing construction area accumulated a year-on-year growth of 4.6%; the area of ​​completed buildings accumulated a year-on-year growth of 19.1%; the country’s commercial housing sales area was 87.51 million square meters. The year-on-year increase was 25.5%. The booming real estate market will undoubtedly drive the sales of polyvinyl chloride downstream pipe profiles. Historically, the impact of real estate market conditions on PVC products has lagged behind for half a year. From September to October 2016, the downstream PVC products market has improved somewhat. The increase in PVC prices is closely related to downstream demand and start-up.