China PVC Profile Industry Operating Rate Inches Down in Dec 2023
Preface: Operating rates at PVC profile enterprises declined in December affected by soft orders. Profile enterprises purchased on a need-to basis and engaged in bargain-hunting. In January 2024, downstream enterprises may take a holiday gradually with China’s New Year holiday approaching. China’s PVC profile industry operating rate may move down further in January 2024.
In December, operating rates at most large-sized profile enterprises hovered around 40%-55%, while those at small and medium-sized profile enterprises hovered at 30%. According to SCI’s data, the overall operating rate at 20 sample profile enterprises was 26% in December, down 2 percentage points M-O-M.
Most enterprises showed weak interest in production due to sales pressure and a certain amount of finished product inventory. Affected by cold weather, a couple of enterprises in Northeast China and Xinjiang have halted production. In addition, several small-sized enterprises shut units down temporarily due to weak orders. On the whole, the profile industry is still in the industry integration, in recent years, the market competition is fierce, operating rates at medium and large-sized enterprises are fairish, while small-sized enterprises face greater pressure.
In 2023, profile enterprises received limited orders mainly because the real estate industry underperformed. More than 60% of the end products of PVC powder are used in real estate-related industries, so the demand for PVC is closely related to the operation of the real estate industry. From Q3, 2021, the real estate industry has entered an adjustment cycle, and relevant data has begun to move downward. Entering 2023, the real estate market showed a certain improvement, mainly reflected in the continuous positive Y-O-Y cumulative growth of the floor space of completed buildings. However, the investment and new startup data underperformed. In addition, PVC profile products are also facing the impact of aluminum profile products.
Most profile enterprises consumed previous feedstock inventory when the PVC powder price moved up and engaged in bargain-hunting when the PVC powder price fell. Profits at several enterprises rose in 2023 compared with 2022 because of low costs, yet orders were tepid.
In January 2024, downstream enterprises may take a holiday gradually with China’s New Year holiday approaching. China’s PVC profile industry operating rate may move down further in January 2024. Profile enterprises may show higher interest in stockpiling if the PVC powder price moves down.
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