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From late November, domestic PVC powder exports began to increase, ethylene method enterprises received better orders, calcium carbide method enterprises also have a certain export. Domestic exports continue to be due to the gradual opening of export arbitrage window and the gradual recovery of Indian demand. As the world’s largest PVC importer, India is also the main export destination of PVC powder from China. Whether the domestic export can be sustainable in the later stage still needs to pay attention to the demand of India.

Where global trade flows: India is the world’s largest importer

From the perspective of global PVC powder trade flow, the largest export areas are mainly concentrated in the United States, China’s Taiwan, mainland China, Japan, South Korea, Central Europe, etc., and the American supplies mainly flow to Central and South America, Europe, Africa and China; Chinese mainland goods mainly flow to Southeast Asia, India, Central Asia, the Middle East and the Russian Federation and other places; Taiwan’s goods mainly flow to India, mainland China, Southeast Asia and other places; In addition, some goods from South Korea, Japan, Europe and Southeast Asia also flow to China.

India is the world’s largest PVC powder import trading partner. In recent years, the demand for PVC in the Indian market has increased rapidly, but there is no new PVC installation in India. India’s production capacity still remains at 1.61 million tons, and its output is basically maintained at about 1.4 million tons. Imports have exceeded local production since 2016. The competition in the Indian market is fierce. Asian goods from Japan, South Korea, Taiwan, mainland China and the United States all take India as the main export market. Currently, the goods from China and Taiwan are highly competitive in the Indian market.

India is becoming China’s main export destination

India used to have anti-dumping measures against China, so the volume of Chinese exports to India is relatively low. In 2021, the total volume of PVC powder exports and the volume of PVC powder exports to India increased significantly, mainly because the US suffered from extreme cold wave in mid-February, which caused nearly half of the PVC powder plants in the US to stop unexpectedly, and the shortage of international supply, which brought the export opportunity to China. In August, the US was also affected by hurricane, and some PVC powder plants again encountered force majeure. Promote domestic PVC powder export volume increase again. In 2022, China’s export volume to India continued to increase, mainly because India’s anti-dumping policy on PVC powder from China expired in January 2022. Before the new policy was issued, India did not charge import anti-dumping duty on China, and Indian domestic enterprises increased their efforts to purchase PVC powder from China with low price. Therefore, in 2022, the quantity of PVC powder exported from China to India increased significantly, which also drove the export volume of PVC powder from China to a new high.

Export status: India’s demand increases domestic export window is open again

Entering the third quarter, the domestic PVC export arbitrage window has been closed. On the one hand, the domestic PVC price keeps falling, foreign buyers are cautious, and there is a strong atmosphere of buying up rather than down. On the other hand, the external demand has weakened and the purchasing enthusiasm has declined. Therefore, from the third quarter of the beginning of domestic PVC export orders is not good, individual ethylene method enterprises maintain the old customers fixed to receive some orders, but calcium carbide method enterprises export orders blocked, with the early export orders to be delivered gradually, so the second half of the year, PVC exports began to gradually fall.

However, since late November, the domestic PVC export arbitrage window has been gradually opened, and some ethylene companies have received orders and volume, while calcium carbide companies have received part of export orders. According to the research of Zhuochuang Information, the current export order price of calcium carbide method is $780-800 / ton FOB Tianjin, but above $800 / ton, the enterprises say that the order is not good. Up to now, some enterprises in December order quantity is more than 5000 tons. Recently, the export orders of PVC enterprises have increased, on the one hand, because the export arbitrage window is gradually opened, although the domestic price is also rising, but the downstream high price resistance, there is resistance in domestic sales; On the other hand, it is because of the improved demand in India. After the Indian rainy season and Diwali Festival, there is a replenishment demand in India, and the supply of goods from the United States decreases, so India increases the purchase quantity from China. In addition, the price of PVC rebounded at a low level. Formosa Plastics of Taiwan recently announced the price of PVC cargo in January 2023, with an increase of $80-90 / ton and good order receiving, so there is still some speculative demand for replenishment in India.

Late export forecast: Focus on export arbitrage window and Indian demand persistence

With the gradual opening of the PVC export arbitrage window recently, the export situation has improved, but for the subsequent PVC export market, on the one hand, we should pay attention to whether the domestic export arbitrage space can continue to open. Although domestic PVC has entered the off-season, the macro environment is improving, and the price fluctuation of PVC is strong. However, as the Spring Festival holiday is approaching, the social inventory is expected to continue to increase. Export may become the main way for PVC powder producers to relieve the inventory pressure.

On the other hand, it is still necessary to pay attention to the external market demand. As the main export destination of our country, the Indian market is relatively key for the export of PVC powder. The recent increase of export is mainly due to the increase of demand in India. However, it is worth noting that on September 16, 2022, the Ministry of Commerce and Industry of India issued a notice saying that in response to the application submitted by Indian domestic enterprises, the import of PVC suspended resin with a residual vinyl chloride monomer content of more than 2PPM will be initiated safeguards investigation, with the investigation period from April 1, 2019 to June 30, 2022. However, according to research, at present, most ethylene law enterprises and some calcium carbide law enterprises can meet the requirements, the specific impact still needs to continue to pay attention to. In addition, the competition in the Indian market is fierce, and the goods from Taiwan, Japan, South Korea and the United States are all quoted in the Indian market. Therefore, it is still necessary to pay attention to whether the price of the goods from China is advantageous in the future.

So to sum up, although the expected delivery orders gradually declined, with the opening of the export arbitrage window in late November, domestic export orders were received one after another, and the export volume to be delivered increased slightly. It is expected that the export volume of PVC powder will rise slightly from November to December at a low level. Whether domestic exports can improve in the following first quarter of next year needs to pay close attention to export arbitrage window and external demand.