Low Transport Efficiency Arose PVC Warehouse Inventory Declines
Preamble: The efficiency of logistics has declined recently in Inner Mongolia, Xinjiang, Ningxia and some areas in East China, and some PVC producers whittled down operating rates, resulting in decreases in PVC availabilities. Slow efficiency of circulation also made PVC inventory at producers mount up, while the warehouse inventory in East China and South China showed a downswing. SCI estimates that the overall social inventory of PVC will remain high, despite drops in operating rates and inventories at East China and South China warehouses. PVC fundamentals will probably keep immobile in the near term.
PVC Industry Operating Rate Dipped
The overall output and operating rate at PVC powder producers decreased this week due to the maintenance and operating rate reduction. The overall operating rate of PVC powder units declined by 2.96% to reach 74.93%. Therein, the operating rate of calcium carbide-based PVC units was 73.56%, down 3.42% W-O-W, while that of ethylene-based PVC units was 79.82%, down 1.49% W-O-W. Four enterprises newly arranged maintenance or temporary shutdown this week, and some enterprises curtailed operating rates. A lot of previously closed units remained in downtime as well. The output loss due to the maintenance dropped by 9.09kt to 37.11kt. Inner Mongolia Chenhongli Chemical, Wanhua Chemical Group, Salt Lake Haina Chemical and QingHai Salt Lake Industry newly arranged maintenance this week, but a lot of enterprises resumed business.
PVC units’ maintenance decreased significantly in October, but the operating rate reduction mainly resulted from lower transport efficiency in Inner Mongolia, Xinjiang, Ningxia, etc. In the meantime, some enterprises cut back operating rates due to the deficient supply of calcium carbide or semi-coke. PVC powder supply declined correspondingly, but the inventory at producers represented an uptrend, which was also caused by unsmooth logistics.
PVC Powder Producer Inventory Grew
The latest data showed that PVC powder presales and inventories at sample producers both climbed. Several ethylene-based PVC powder producers received export orders, and a lot of PVC powder producers enjoyed favorable domestic orders amid bullish sentiment after the National Day holiday. That reflected an increase in overall presales at producers. Concerning the producer inventory, it moved up because the transport efficiency of goods slowed down, as said above.
East China & South China Warehouse Inventory Dropped amid Fewer Arrivals and More Deliveries
China’s PVC powder market prices rose at first but then declined this week. Producers had favorable sales at the beginning of this week, but deliveries were limited due to the blocked logistics. Thus, fewer goods were put into the commercial warehouse. Meanwhile, inventories at warehouses went down, as downstream enterprises stockpiled before the holiday and picked up goods after the holiday. In summary, inventory removal was larger than inventory input, dragging down the social inventory of PVC powder in East China and South China.
East China and South China PVC Weekly Inventory
Methodology: PVC powder inventory in East China and South China above refers to the sample inventory data at main warehouses there on Friday. It is collected by fixed sampling method from nine warehouses respectively in East China and South China. The sample coverage is 80%.
Sample inventory in East China and South China = sample inventory in East China + sample inventory in South China
Compared with the same period of last year, PVC powder inventory at East China and South China warehouses is notably higher at present because of lackluster demand. Downstream enterprises started to uplift operating rates successively in September, but that growth was slow. Moreover, downstream enterprises had feedstock inventories, so they showed declining interest in buying. Generally, PVC powder inventory at East China and South China warehouses is supposed to stay high in the short run, and fundamentals will probably change little.
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