Profits of Calcium Carbide-Based PVC Powder Improved
Preface: Market participants held bullish attitudes toward the PVC powder market backed by improved macro atmospheres and increased export orders. PVC powder futures prices rose, followed by increased spot market prices. PVC powder producers raised the EXW price, while calcium carbide prices were largely stable. Thus, the gross profit of PVC powder perked up. SIC reckons that PVC powder producers will face less cost pressure in August with the improvement in the profit of calcium carbide-based PVC powder.
Profit losses of calcium carbide-based PVC powder were eased.
At the end of July, the Political Bureau of the CPC Central Committee held a meeting to analyze the current economic situation and plan economic work for the second half of the year. There were bullish expectations in the macro market. During this period, as foreign buyers showed higher interest in purchasing PVC powder, export orders saw a significant increase. PVC powder fundamentals improved. Therefore, PVC powder market prices moved up. After that, the EXW offer was lifted notably.
At the same time, except for several regions, calcium carbide prices remained largely stable. Thus, profit losses at PVC powder producers with outsourced calcium carbide as feedstock were eased obviously.
Up to July 31, 2023, the profit loss at PVC powder producers with outsourced calcium carbide as feedstock in Shandong was RMB 215/mt, down RMB 409/mt from the end-June. The profit loss at PVC powder producers with outsourced calcium carbide as feedstock in Inner Mongolia turned losses into gains at the end of July.
Profits of calcium carbide-based PVC powder may improve.
In August, though there are uncertainties in the calcium carbide market, the price fluctuation may be limited. The average price of calcium carbide inched up, propping up the cost of PVC powder slightly. As export orders moved up recently, PVC powder producers faced limited sales pressure. In addition, the slack season of downstream industries may come to an end. Thus, PVC powder producers hold offers relatively firm in August. SCI reckons that the EXW price of PVC powder will see an M-O-M growth in August.
On the whole, it is expected that the gross profit of calcium carbide-based PVC powder in August will perk up. Profits at PVC powder producers who purchase calcium carbide outside will possibly be positive, so the cost pressure of producers may be eased. Accordingly, costs may give weaker support to the PVC powder market. The change in the PVC industrial operating rate should be concerned. If a couple of producers raise operating rates or resume production boosted by increased gross profits, the increment in supply will weigh on the improvement of fundamentals.
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