PVC Peak Season Demand Starts Again
In May 2019, the price of PVC futures rose to 7160 and then adjusted. With the end of the transition of the small off-season in June, the demand end began to rise in early July, and the inventory fell to a medium level, and the price of PVC faced support again.
According to the statistical data of the institution, the output of PVC decreased 0.2% year-on-year from January to may in 2019, which is deviated from the expected 7% year-on-year growth of the output in 2019 at the end of 2018. From the historical perspective, the year-on-year growth rate of production in january-may 2017 was 12.4%, the year-on-year growth rate of production in january-may 2018 was 6.5%, the year-on-year growth rate of production in 2019 was gradually decreasing, and the elasticity of supply side was continuously decreasing. The growth of PVC supply end in 2019 is much lower than expected, mainly due to two factors. The first is that the production of the two sets of devices that occurred in November 2018 and April 2019 due to accidents have not been resumed, and the supply side reduction is greater than the incremental capacity expansion of some of the devices. The second is that due to the influence of production safety, environmental protection inspection and the improvement of enterprise safety awareness, the maintenance loss in May 2019 exceeded the level of the same period last year. The capacity utilization rate of the plant has been increased to more than 80%, and there is little room for continuous expansion of production. Overall, the quantity of supply side is lower than the market expectation, which has a positive supporting effect on the price.
In january-may 2019, the apparent consumption of PVC increased 0.9% year on year, mainly due to the net import pattern in january-may, and some imports filled the gap in demand. From the data of supply and demand, output is subtracted and demand is added. Overall, the tight supply and demand pattern exceeded market expectations.
According to PVC inventory data, PVC inventory began to decline on March 22, 2019, and the latest data is more than 30% higher than the same period last year. From the details of inventory, the year-on-year growth of inventory is mainly concentrated in several key warehouses in east China. Some sources of goods are temporarily non-circulating inventory. Excluding this part of inventory, there is little difference between the level of the total inventory and that of the same period last year. Traders and terminal inventory available days are not high, the pressure on prices is relatively limited.
From the perspective of seasonal law, the terminal operating rate showed a small decline in June, and the terminal operating rate began to slowly recover at the end of June and the beginning of July, indicating that the demand end began to prepare for the start of the peak season of gold, silver and silver.
Overall, the tight supply and demand pattern of PVC has not changed, which is conducive to the continuous decline of social inventory, and the suppression effect on price will be further weakened. From the seasonal demand, the demand side gradually pick up, there will be some support for the price.
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