China PVC Weekly Report（September 05 to September 09, 2022）

Expectation for next week:

1. PVC factory maintenance is being completed, and it is expected that the operating rate will continue to recover.

2. The downstream is already in the peak season of the year, but there is no significant increase in the demand. The re-emergence of the epidemic in many major cities further affected terminal demand; the supply surplus continues and price is weak.

3. The effect of the resumption of construction on the suspended real estate in Zhengzhou remains to be seen.

PVC Price: The average price of PVC rose slightly this week, mainly because of the strong futures which led to a slight increase in the spot goods, but the spot supply and demand basically continued to be weak, and the price increase was difficult to transmit downstream. As of September 9, the East China calcium carbide method PVC price is 955 $/ton (+23 ), East China Ethylene Law PVC price is 966$/ton (+11).

Supply: PVC operating rate is expected to increase. This week, the PVC operating rate was stable at 72.4%, an increase of 0.25% month-on-month; among which, the calcium carbide method PVC operating rate was 74.43%, a month-on-month increase of 1.85%; the ethylene-based PVC operating rate was 64.95%, a month-on-month decrease of 5.64%. The price of calcium carbide remained at a relatively low level. The low profit of calcium carbide led to a decline in operating rate, so the profit of PVC was repaired, and many sets of devices were restored. It is expected that the operating rate will continue to increase.

Demand: The terminal demand is insufficient. Due to the epidemic in many places, the demand recovery is slow. The notice of resumption of construction of the suspended real estate in Zhengzhou has a certain boosting effect on the market sentiment, and the demand in India and Southeast Asia has not yet rebounded.

Inventory: Inventory has remained high recently. According to Zhuo Chuang statistics, the total inventory of sample warehouses in East China and South China in the week was 348,600 tons (+0.9% month-on-month, +126.42% year-on-year), still at the highest level in the same period of previous years, and demand was weak , the supply fell in the early stage failed to lower the inventory.

Exports: The external market continued to be stable, and the price difference between domestic and foreign prices did not change much.

Asian market: Last week CFR Southeast Asia was 868 (0) $/ton, CFR India 1030 (0) $/ton, CFR China 890 (0) $/ton.

Taiwan's Formosa Plastics' quotation of PVC cargoes in September 2022 has been reduced by $20-70/ton compared with August. Among them, FOB 830 (-50) $/ton CFR Southeast Asia 980 (0) $/ton, CFR India 1020 (-70) $/ton, CFR China reported 910 (-20) $/ton.

India imported a total of 190,000 tons of PVC in June, the highest level since April last year. China is the main exporter, reaching 100,000 tons. The United States' exports are recovering, about 3,000 tons. Before 2019, the United States was India's largest exporter. Affected by the intensified competition with US ocean-going cargoes, the pre-sale quotation in Asia may continue to be lowered in October. It is rumored that the price of US PVC arriving in December is 930-940 $/ton. The spot price in India has been stable recently, and the transaction is light due to the 10-day Hindu festival. With the end of the monsoon, it is expected that demand will recover after mid-September.

Pakistan's demand was weak due to the flood. Indonesia started infrastructure construction near the new capital at the end of August. The quotations of major local PVC manufacturers in September continued to remain stable in August.

European and American markets: Last week, Houston, Northwest Europe 759 (-30) / 1330 (-30) $/ton.

The US market remained stagnant, but domestic market prices continued to fall by 5 cents/lb in September due to slowing real estate activity and inflationary pressures. At the end of the second quarter, North American PVC inventories were 324,000 tons, 11.6% higher than the 290,000 tons at the end of the first quarter.

European energy costs are high, especially for electricity, which hit a new high. However, demand is weak and inflation continues, PVC prices are difficult to rise, and companies are affected by profit compression. The drought in Europe also caused a significant reduction in the logistics and transportation capacity of the Rhine. Dutch industrial chemical producer Nobian declared force majeure on August 30, mainly due to equipment failure, but also affected by drought and restrictions on raw material supply. The company said it could not fulfill orders from downstream chlorine customers. Affected by the impact of low import prices, the market price in Turkey fell slightly.