Terminal demand is still insufficient, PVC production has potential for improvement
2023/9/12
Affected by the increase in PVC operating load, the price of calcium carbide has significantly increased recently, resulting in a corresponding decrease in PVC profits. However, the PVC profits of self-produced calcium carbide in the northwest region are not affected, and the overall trend of device maintenance is downward. It is expected that upstream operation will maintain a slightly higher level.
The terminal demand is still insufficient. Due to the limitation of the total decline in real estate demand and the generally slow construction progress, we are currently entering the peak demand season, with downstream construction slightly improving compared to the previous period, and the overall level is still at a relatively low level.
The maintenance volume is gradually decreasing, the supply is still acceptable, and the demand has slightly increased. Recently, inventory has been slightly depleted for four consecutive weeks and remains at a high level. The current PVC maintenance is ending, and the cost of PVC is supporting an increase. However, the supply of calcium carbide is expected to increase, and there is potential for improvement in PVC production.
Downstream and terminal substantive demand is insufficient, with strong export demand in the early stage and recent weakness. The current market's expectations for policies, the peak demand season for gold, silver, and exports support prices, but the future situation may not be as expected. Observe the inventory accumulation situation. Looking ahead to the future market, it is expected that PVC will show a volatile trend overall in September. The core of the trading logic will be when demand improves and whether the newly returned supply can be offset by the increase in demand.
From the current perspective, firstly, the stagnant inventory levels in the middle reaches and the difficult to strengthen basis reflect the weak transaction in the goods market; Secondly, the maintenance of most devices will gradually return in September, which means that there will be a significant increase in supply in September. The increase in supply increment may increase the pressure on accumulated inventory before demand starts.
Therefore, considering that the rise of PVC market is more based on the improvement of macro sentiment rather than the improvement of fundamental reality, it is recommended that investors temporarily wait and see until there is a significant decrease in mid stream inventory before considering entering the market to try to increase.
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