China PVC Powder Prices to Hover at Highs in the Short Term
Preface: In May, PVC prices saw an upward trend. PVC powder futures prices rose to RMB 6,664/mt, followed by spot prices. Up May 28, the self-delivery price of SG-5 rose by RMB 450-500/mt compared with end-May. Improved macro atmospheres were the main factor for the price increase. Demand and market transactions failed to gain.
The macro market was the main factor for the price increase.
Marco market:
On May 13, The Ministry of Finance announced the relevant arrangements for the issuance of general Treasury bonds and ultra-long-term special Treasury bonds in 2024. The State Council said that the government would purchase some commercial housing at a reasonable price as affordable housing in cities that had high commercial housing inventory. The central bank and the State Administration of Financial Supervision, for residential families who borrow to buy commercial housing, the minimum down payment ratio of commercial personal housing loans for the first set of housing is adjusted to not less than 15% and that for second sets of housing is adjusted to not less than 25%. The People’s Bank of China decided to reduce the interest rate of individual housing provident fund loans by 0.25 percentage points from May 18, 2024, and adjust the interest rate of individual housing provident fund loans of less than 5 years (including 5 years) and more than 5 years to 2.35% and 2.85% respectively. The real estate-related market moved up.
Fundamentals:
Supply: Intensive PVC unit maintenance in May eased supply pressure to some extent.
Demand: Downstream demand was largely stable, and demand from the soft product industry inched up.
Export: In May, China’s PVC powder export market was lukewarm. Formosa Plastics raised export offers due to higher freight. China’s PVC powder export orders also rose, so foreign buyers showed low purchasing interest.
The integrated profit at chlor-alkali enterprises changed narrowly in May as calcium carbide prices rose and liquid chlorine and caustic soda prices inched down.
The average price of PVC powder in June may be higher than that in May affected by the macro market and fundamentals.
Marco market:
There are still expectations for loose policies, and market players hold bullish sentiments toward the market.
Supply:
PVC social inventory may remain high as limited unit maintenance in June has been heard.
Demand:
Orders at hard product enterprises will possibly remain soft.
Export:
From June to July, the demand for PVC in Southeast Asia may be in the slack season due to the rainy season. Coupled with increased freight and offers, export volume may fail to rise.
On the whole, SCI reckons that PVC prices will likely hover at highs in early June backed by the macro market, and then fall with the bullish effect ebbing.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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