PVC: When the pressure on market inventory is high, when will it revive?
2023/8/16
Last week (8.7-8.11) the main 09 contract of PVC futures fell slightly, opened at 6,187 yuan/ton, and closed at 6,152 yuan/ton. On the macro front, with the release of some economic data falling short of expectations and the cooling of market expectations, the overall market sentiment has weakened, and the prices of some equity assets will be under pressure.
In terms of spot goods, the price of calcium carbide at the raw material side continued to rise this week, and the start of semi-coke production fell sharply, which brought support on the cost side. The industry inventory continued to be eliminated, and the basis was significantly strengthened.
Some economic data fell short of expectations, and macro sentiment cooled
On August 11, the central bank released financial data showing that the social financing scale increased by 528.2 billion yuan in July, 270.3 billion yuan less than the same period last year; RMB loans increased by 345.9 billion yuan in July, 349.8 billion yuan less than the same period last year.
From a macro perspective, expectations are cooling down, some economic data are not as expected, short-term equity asset prices may be under pressure, and new policy expectations are urgently needed to stimulate.
The start of work has not changed much, and the basis has strengthened significantly
As of August 11, 2023, China's PVC production capacity utilization rate was 73.995%, 0.08% from the previous period. This week, Junzheng, Shanxi Huojiagou, Cangzhou Julong, and Formosa Plastics Ningbo stopped for maintenance, resulting in a lower overall production capacity utilization rate. The start of work is expected to be little changed this week.
During the week, the operating rate of PVC pipe enterprises was 44.45% month-on-month + 1.36%; the operating rate of profile enterprises was 35% month-on-month + 1.87%. During the week, downstream starts rose slightly from the previous month. In terms of transactions, the weekly transactions improved slightly from the previous month, and some middle and lower reaches replenished goods at low prices, and the basis difference strengthened significantly.
High inventory and weak demand suppress, or fluctuate in a wide range
As of August 11, the domestic PVC inventory was 475,100 tons, a decrease of 0.36% from the previous month and a year-on-year increase of 24.25%.
From the perspective of fundamentals, there is an undervaluation under PVC, and the mentality of the middle and lower reaches has also been restored to some extent, but there are high inventories and weak demand suppression. Although the cyclical bottom has been confirmed, the rebound trend will continue, but the height of the periodic rebound is expected to be limited, and it will continue to face wide fluctuations in the short and medium term. It is recommended to increase the distance for every callback.
Judging from the current macro-environment, the recovery of the domestic economy and real estate may take the form of a weak recovery, or even fall short of expectations in stages. This year, PVC is unlikely to make a big breakthrough, and PVC may face wide fluctuations.
From a unilateral point of view, it is recommended to allocate more distant months every pullback. If the monthly economic and real estate data falls short of expectations, it is recommended to prepare for hedging protection in every rebound.
JIN DUN CHEMICAL has built a special (meth) acrylic monomer manufacturing base in ZHEJIANG province. This makes sure the stable supply of HEMA, HPMA, HEA, HPA, GMA with high level quality. Our special acrylate monomers are widely used for thermosetting acrylic resins, crosslinkable emulsion polymers, acrylate anaerobic adhesive, two-component acrylate adhesive, solvent acrylate adhesive, emulsion acrylate adhesive, paper finishing agent and painting acrylic resins in adhesive.We have also developed the new and special (meth) acrylic monomers and derivatives. Such as the fluorinated acrylate monomers, It can be widely used in coating leveling agent, paints, inks, photosensitive resins, optical materials, fiber treatment, modifier for plastic or rubber field. We are aiming to be the top supplier in the field of special acrylate monomers, to share our rich experience with better quality products and professional service.
