Research report text
Summary of views:
supply:As of February 17, 2023, the operating rate of upstream PVC manufacturers is 80.09%, which is at a historically low level. The operating rate of manufacturers in the downstream North China region of PVC is 32%, and the operating rate of manufacturers in the downstream South China region is 42%, which is at a historically high level.
need:PVCDownstream demand is closely related to real estate investment. As of December 2022, the year-on-year growth rate of new housing starts in my country is -39.4%, which is at a historically low level; the cumulative year-on-year growth rate of housing development investment is -10%, which is at historically high level. In addition, the growth rate of investment in my country’s infrastructure construction has an increasing impact on the demand for PVC. As of December 2022, the growth rate of fixed asset investment in my country’s infrastructure construction will be 9.4%, which is at a historically high level.
in stock:As of February 17, 2023, the PVC inventory of production enterprises in the upstream and western regions is 69,500 tons, which is at the historical average level; the PVC inventory in the downstream East and South China regions is 427,000 tons, which is at a historically high level.
1. Market review
On February 17, 2023, the closing price of the main PVC contract V2305 was 6,338 yuan/ton, an increase of 4 yuan/ton compared with the previous trading day; the position of the main contract was 806,839 lots, a decrease of 17,504 lots compared with the previous trading day ; On that day, the total PVC contract position amounted to 40,866,341,500 yuan, a decrease of 617,144,100 yuan from the previous trading day, and the total PVC position amount was at a relatively high level compared with the past year.
Under the optimistic expectation before the year, the main contract after the festival saw a weekly adjustment. After a hesitation and consolidation, it gradually stabilized last week. The recent trend has improved slightly, and the market outlook is cautiously bullish.
2. Spot Analysis
There are two production processes of polyvinyl chloride: calcium carbide method and ethylene method. The quality of PVC produced by ethylene method is pure and uniform, and the price is slightly higher than that of calcium carbide method PVC. The delivery varieties of my country’s PVC futures are SG5 first-class products that meet the national standards. The exchange has no clear restrictions on whether the delivery products are produced by the calcium carbide method or the ethylene method.
As of February 17, 2023, the spot price and spread of PVC are as follows:
The average price of domestic ethylene-based PVC spot on that day was 6,458 yuan/ton, an increase of 28 yuan/ton compared with the previous day.
On that day, the average domestic spot price of calcium carbide PVC was 6,257 yuan/ton, an increase of 13 yuan/ton compared with the previous day.
The price difference between the ethylene method and the calcium carbide method was 201 yuan/ton on that day, an increase of 15 yuan/ton compared with the previous day, and the price difference was at a historically low level.
As of February 17, 2023, the current price difference of polyvinyl chloride is -8 yuan/ton, an increase of 3 yuan/ton compared with the previous day, and this price difference is at a low level in history.
3. Supply analysis
For a long time, my country’s PVC market has been based on the coexistence of two process routes of calcium carbide and ethylene. However, due to the characteristics of my country’s “rich coal, poor oil, and little gas” resources, calcium carbide PVC has become the leading process in my country, but in the international market In the market, mainstream PVC products are all produced by the ethylene method, and ethylene is produced by cracking oil and natural gas, so the price of PVC shows a relatively strong correlation with international oil prices.
The process route of ethylene-based PVC is: crude oil—naphtha—ethylene—ethylene dichloride (EDC)—vinyl chloride (VCM)—polyvinyl chloride (PVC)
As of February 17, 2023, Brent crude oil futures closed at $83.66/barrel, down $2.77/barrel; WTI crude oil futures closed at $76.34/barrel, down $2.15/barrel;
As of February 17, 2023, the price of naphtha is US$713.25/barrel, a decrease of US$7.25/barrel;
As of February 16, 2023, the price of ethylene is US$891/ton, an increase of US$55/ton.
my country’s chlor-alkali production enterprises generally use the calcium carbide method to produce polyvinyl chloride, and the calcium carbide method PVC production accounts for about 80% of the country’s total output.
The production process of calcium carbide polyvinyl chloride is: coal — calcium carbide —acetylene — vinyl chloride (VCM) — polyvinyl chloride (PVC)
At present, the electric furnace reduction method is the mainstream method for industrial production of calcium carbide.cokeIt is mixed with lime as raw material according to a certain ratio and added to a closed calcium carbide furnace, and heated to 2000-2200 degrees to obtain calcium carbide. Because this method consumes a large amount of electric energy, for calcium carbide polyvinyl chloride production enterprises, the proportion of electricity cost to the total cost is relatively high.
To sum up, the price of PVC futures is affected bythermal coal(Electricity price), coke and calcium carbide prices, the correlation is high.
As of February 20, 2023, the thermal coal futures price in my country was 801 yuan/ton, unchanged from the previous day; the coke futures price was 2,832.5 yuan/ton, an increase of 21 yuan/ton from the previous day.
As of February 17, 2023, the average spot price of calcium carbide in mainstream calcium carbide factories in Northwest China was 3,675 yuan/ton, a decrease of 75 yuan/ton compared with the previous day; Day by day, no change.
When chlor-alkali enterprises produce liquid chlorine, they will also obtain the accompanying product caustic soda. In recent years, the price of caustic soda and liquid chlorine have formed a seesaw effect, that is, when the price of caustic soda is high, the price of liquid chlorine is relatively low, and vice versa, which keeps the profits of chlor-alkali enterprises at a reasonable level. However, liquid chlorine is not easy to store and transport over long distances, so manufacturers tend to synthesize polyvinyl chloride to consume excess liquid chlorine stocks.
The downstream of caustic soda mainly includes alumina, papermaking, printing and dyeing, and chemical industries. The recovery of caustic soda downstream will drive chlor-alkali enterprises to increase caustic soda production, and the associated product liquid chlorine will be made into polyvinyl chloride, thereby passively increasing the market supply of polyvinyl chloride , which will suppress the market price of PVC to a certain extent. Generally speaking, when the price of caustic soda is low, the price of PVC tends to remain high.
As of February 16, 2023, the spot price of ion-exchange membrane caustic soda is 1,243 yuan/ton, a decrease of 2 yuan/ton from the previous day, and the current price is at a historically high position.
At present, the main domestic demand for caustic soda comes from the production of alumina, so the price of caustic soda is highly correlated with the price of alumina.
Domestic electrolytic aluminum is widely used in industries such as real estate, automobiles, and electric power. The recovery of these downstream industries will increase the demand for aluminum products, which will be transmitted to the upstream, driving up the price of caustic soda, and indirectly affecting the price trend of PVC futures.
As of February 17, 2023, the spot price of domestic alumina is 2,975 yuan/ton, which is unchanged from the previous day, and the current price is at the historical average position.
As of February 17, 2023, the operating rate of upstream PVC manufacturers is 80.09%, which is at a historically low level. The operating rate of manufacturers in the downstream North China region of PVC is 32%, and the operating rate of manufacturers in the downstream South China region is 42%, which is at a historically high level.
4. Demand Analysis
PVC occupies a very important position in the consumption structure of the construction industry. About 60% of PVC is used to produce building materials such as profile doors, windows and profiled materials. It can be said that the price trend of PVC is closely related to my country’s real estate cycle.
After the construction of the house, PVC pipes are usually used for drainage, sewage and rain leakage systems; after the sale of new houses, PVC materials are also used for interior decoration involving pipelines, door and window profiles, and decorative materials.
Judging from the growth rate of PVC production and the growth rate of housing starts, under normal circumstances, PVC demand lags behind the real estate cycle by 6-12 months.
As of December 2022, the cumulative area of new housing starts in the country was 1,205,870,700 square meters, with a year-on-year growth rate of -39.4%, and the growth rate was at a historically low level;
Among them, the cumulative area of new housing starts in the eastern region was 529.2886 million square meters, with a year-on-year growth rate of -38.7%, and the growth rate was at a historically low level;
The cumulative area of new housing starts in the central region was 326.7231 million square meters, with a year-on-year growth rate of -36.8%, and the growth rate was at a historically low level;
The cumulative area of new housing starts in the western region was 307.4665 million square meters, with a year-on-year growth rate of -40.2%, and the growth rate was at a historically low level;
The cumulative area of new housing starts in Northeast China was 42.3924 million square meters, with a year-on-year growth rate of -55.2%, and the growth rate was at a historically low level.
Although the downstream demand for PVC mainly comes from real estate, with the gradual implementation of policies such as the construction of underground pipe corridors and the renovation of shantytowns in my country, orders from infrastructure are gradually becoming an important part of the downstream PVC, complementing the demand for real estate, which weakens the Periodic properties downstream of the PVC.
As of December 2022, the year-on-year growth rate of my country’s infrastructure fixed assets was 9.4%, which was at a historically high level.
Among them, the year-on-year growth rate of fixed assets in the production and supply of electric power, heat, gas and water was 19.3%, which was at a historically high level;
The year-on-year growth rate of fixed assets in the transportation, warehousing and postal industries was 9.1%, which is at a historically high level;
The year-on-year growth rate of fixed assets in the water conservancy, environment and public facilities management industry was 10.3%, which was at a historically high level.
5. Inventory analysis
my country’s PVC production enterprises are mainly concentrated in the western region, while the downstreamplasticProcessing and sales are concentrated in East China and South China. The level of inventory in the western region can reflect the production and shipments of upstream manufacturers, while the level of inventory in east and south China can reflect whether the downstream demand is good and whether dealers are willing to actively purchase.
As of February 17, 2023, the PVC inventory of production enterprises in the upstream and western regions is 69,500 tons, which is at the historical average level; the PVC inventory in the downstream East and South China regions is 427,000 tons, which is at a historically high level.
6. Import and export
PVC is a highly cyclical chemical product, and its futures price is often affected by both supply (production and import volume) and demand (apparent consumption, export volume). Sorting out and analyzing the balance sheet of supply and demand is the key to studying PVC futures One of the more important jobs.
As of December 2022, the monthly value of PVC imports is 55,400 tons, which is at a historically high level; the monthly value of PVC exports is 125,800 tons, which is at the historical average level.
7. Market Outlook
Optimistic expectations before the Spring Festival have pushed up the main contract prices, and downstream companies have accumulated a lot of inventory, and there have been weekly adjustments after the festival. The market gradually stabilized last week after hesitation and consolidation, and the recent trend has improved slightly. After that, the PVC market will continue to maintain the previous view. It is advisable to make a bargain in the medium term, and wait for the fundamental transmission after the policy is implemented, and wait for the demand to pick up.
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