Domestic economic boost superimpose peripheral demand stimulus, PVC market bottom gradually tamp introduction: this week macro expectations brought about the good still effect PVC market sentiment, spot performance is relatively optimistic, the price slowly rise. However, due to the current demand did not appear synchronous increase, so the lack of follow-up motivation. In addition, the boost of export season for PVC also drove the upward movement of the bottom space.
Focus of attention:
1. Macro drives the emotional side continuously
2, PVC exit duration and space
3. After the deep drop of liquid chlorine, PVC production has raised negative expectations
4, the downstream holiday time node
Domestic epidemic control adjustment, policy to drive market confidence
On December 7, the “Ten new measures” for epidemic prevention and control were implemented, and the market took a positive attitude towards the policy promotion after further optimization of epidemic prevention and control measures. In addition, the domestic central bank and banks further increase the support for real estate and the purchase policy continues to loosen, the real estate market recovery expectations further rise. In the short term, domestic risk appetite is on the rise and market participants remain cautiously bullish on commodities.
“Foreign trade defense war” fired the first shot of economic recovery
In this year’s complex and severe situation of geopolitical conflicts, soaring energy costs and rising inflation, the global overall demand is weak, the downward pressure on the economy is increasing, and the orders of China’s foreign trade enterprises have been “off-peak season” phenomenon. In November 2022, China’s import and export value was US $522.34 billion, down 9.5 percent year on year and 0.4 percent in October, the second consecutive month of decline. With the adjustment of domestic epidemic prevention and control measures, local governments are helping foreign trade enterprises “go global” to stabilize orders and expand the market. For example, Jiangsu, Zhejiang, Sichuan, Fujian and Guangdong have organized business charter flights for foreign trade enterprises to expand international markets overseas.
Us, South Korean rail strikes boost PVC exports from China
On Nov. 24, about 25,000 truckers nationwide responded to a strike by the Cargo Union, a trucking union under the umbrella of the Korean Confederation of Trade Unions. America’s rail strikes, which date back to July, have reached a “tentative” agreement until December 8th after a 60-day “cooling-off” period, thanks to the intervention of President Joe Biden. The United States and South Korea, as the main export places of PVC in the Asian market, have a great impact on the Indian market, which is gradually entering the peak season. In the face of the depressed PVC market in 2022, the downstream products enterprises mostly adopt the purchase policy of on-premise and on-premise, and the overall raw material inventory is not high. When the arrival of goods is delayed, the Indian market starts to turn to China and other places for procurement. In addition, due to the expectation of the relaxation of epidemic prevention policy in the Chinese market, foreign markets generally expected the bottom of the price. Formosa Plastics in Taiwan was also snapped up after the price was quoted, which promoted the sudden increase of exports in the Chinese market from late November to now.
Summary: PVC shows a short-term improvement under the two major forces. The continuous easing of monetary policy, the increasing of real estate support policy and the continuous optimization of epidemic prevention and control policy all support the strong wind direction of PVC. In terms of exports, since the strike in the United States and South Korea stopped on December 9, we will have to compete for supplies from the two countries. However, the export market remained positive this month as India and Southeast Asia entered the peak demand season.
Double section arrival, downstream products enterprises gradually enter the demand off-season
This week, the operating rate of downstream products enterprises was 47.86%, increasing by 1.90% month-on-month and decreasing by 0.04% year-on-year. The opening rate of profile was 36.25%, increasing 3.75% month-on-month and decreasing 2.88% year on year. The main reason for the slight increase in the current construction is that some sample enterprises are driven by the regional resumption of production, especially in the northern regions where some orders are rushed.
PVC maintenance enterprises less, late supply is sufficient
At present, the weekly output of PVC enterprises is gradually increasing, mainly because there are fewer maintenance enterprises in winter, and enterprises maintain stable operation. In this week, the price of liquid chlorine in Shandong region dropped significantly, and there was a partial upside down 1,000 yuan of orders. Due to the problem of liquid chlorine sales, some enterprises plan to increase PVC production to consume excess liquid chlorine, and the construction of PVC industry will increase in the later stage.
Summary: The supply side will remain stable and is expected to increase. In January, PVC production enterprises are facing the “double festival”, and the downstream enterprises have the holiday plan in advance because of the return of workers and other problems. January will face more than 20 days of supply and demand imbalance period.
To sum up, the domestic market is driven by macro and export, and the market trading logic is still in the future. In the short term, the price of PVC East China calcium carbide method Type 5 powder will run between 5900-6300 yuan/ton.
In the medium term, under the background of the low demand season in winter, the
Post time: Dec-13-2022