PVC Outlook

With the early stage of backward production capacity phased out and improved demand support, PVC industry supply and demand to restore the weak balance.In 2019, PVC futures showed a high-volatility trend, with the center of gravity basically operating within the range of 6300-7000, the fluctuation range narrowed, and the peak of the year also decreased.Most of the time in 2019, PVC maintained a range of concussion trend, the overall smooth operation, no big ups and downs market.Domestic macro environment is not good, PVC futures market is also suppressed to a certain extent.PVC spot market trend is obviously stronger than the futures market, spot prices for a long time in the state of deep premium.Production of some of the units planned for expansion in 2018 has been postponed to 2019. 

PVC production capacity has continued to rise, reaching 620,000 tons, with a total capacity of more than 25 million tons.From the perspective of new production capacity release in recent years, the production capacity release schedule of the PVC industry is increasingly affected by environmental protection policies and other policies. Although there are many projects under construction or planned, actual production is limited.Raw material calcium carbide prices fell, PVC production costs have been reduced.

PVC spot price high operation, enterprise production profit is considerable.However, due to more equipment maintenance and some unstable operation, the operating rate of the PVC industry has dropped significantly, and the supply has been tightened.Production enterprise inventory pressure is not large, and pre-sale orders.PVC downstream demand profiles and plates linked to the real estate industry, but in recent years, the real estate policy control efforts continue to climb.The accumulative performance of the newly started area, the sold area and the completed area of housing is not good compared with the same period last year. The rigid demand of the downstream market is stable on the whole, but the follow-up is slow and the consumption promotion space is limited.From September 29, 2019, the anti-dumping duty on imports of polyvinyl chloride from the United States, the republic of Korea, Japan and Taiwan will no longer be levied. After the anti-dumping duty is cancelled, a large number of low-price PVC sources will inevitably flow into the Chinese market.With the decline of ethylene price, the price advantage of foreign PVC supply gradually appeared, later China's PVC import volume is expected to increase, from a long-term perspective, the PVC market has a negative impact.However, the export volume of PVC continues to shrink, the price of domestic PVC continues to be high, and the window of export arbitrage is opened in a short time. 

Most domestic PVC enterprises are mainly for domestic sales, and their enthusiasm for export is not good.The social inventory of PVC once exceeded 400,000 tons, and the destocking process was prolonged. Now it has recovered to a low level.The growth rate of PVC production has slowed down, the support of rigid demand has exceeded expectations, and the market supply and demand pattern is relatively tight.Although later imports or impact on the domestic market, PVC supply and demand relationship has become weaker, but the contradiction will not be very prominent.In the weak balance between supply and demand, PVC cautiously bullish, the center of gravity or lift.In 2020, PVC futures are expected to break through the 7000 barrier, and further exploration.Overall, PVC may present an "N" trend, with prices fluctuating in the range of 6,300 to 7500.


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