September PVC Supply and Demand Probably to Be Weakly Balanced
Preface: PVC powder fundamentals improved in August. The imbalance between PVC powder supply and demand diminished with notable supply cuts, largely steady domestic demand and falling net export volume. SCI predicts that PVC powder supply and demand will both rise a little, and its exports will continue sliding. The gap between supply and demand is supposed to change narrowly.
PVC powder supply declined a lot in August with production cuts. Meanwhile, its demand mounted a little but stayed muted. PVC powder exports are predicted to extend decreases, and the imports will probably remain limited, leading to a continuous decline in PVC powder net export volume. The imbalance between supply and demand shed about 25kt M-O-M in August. PVC powder social inventory at sample warehouses in East China and South China headed down after rising in August, reflecting a limited change. As of end-August, that inventory was 344.5kt, down 2.82% M-O-M.
PVC powder supply and demand are expected to inch up in September, and how will the gap between them change in the future?
PVC Powder Unit Operating Rates Probably to Edge Up with Decreasing Maintenance
According to SCI, the output and operating rate at PVC powder companies both declined in August 2022 because more units underwent maintenance and a lot of units were shut down accidentally and temporarily. Some companies faced serious profit losses. Besides three companies that remained in long-term shutdown, there were 24 companies experiencing maintenance or temporary shutdown in the month. In September, the output loss caused by the units’ maintenance is estimated to drop slightly to 280kt or so, as a lot of units are resuming production with fewer incidents, even though profit losses are underway. The monthly operating rate at PVC powder companies will probably reach 74.5% after 2% increments.
Sep 2022 China PVC Powder Unit Maintenance
Remarks: SD* = shutdown, RS* = restart
In August, China’s PVC powder export arbitrage window was closed most of the time. Export business was tepid as international PVC powder prices showed a downturn amid lackluster demand. SCI holds that China’s PVC powder export volume will decline gradually from August to September. The arbitrage window remained closed as well in the import market. It is predicted that imported goods will mainly be for processing, and imported goods based on general trade mode will show an uptick. SCI estimates that PVC powder net export volume will decrease from 150kt in July to 100kt in August and September.
PVC Powder Demand Unlikely to Revive Remarkably in September
Since this year, the performance of the real estate market has weakened significantly, and the cumulative data of new construction and completion in the second quarter have declined significantly year-on-year. It needs time for PVC powder downstream demand to improve effectively, even though the strategy of house delivery guarantee was introduced. From the perspective of seasonal law, September belongs to the traditional demand peak season, during which the demand for PVC powder is expected to improve. However, as seen from the micro data, orders and operating rates at downstream enterprises have not recovered noticeably. Participants hold a see-saw stance about the demand performance in September.
September Supply and Demand to be Weakly Balanced, and Inventory to Stay High
According to the forecast on supply and demand data, SCI predicts that PVC powder supply and demand will present a weak balance in September. PVC powder unit operating rates are likely to inch up, and its domestic demand is predicted to improve a little. The net export volume will continue to fall. Generally, SCI predicts that PVC powder supply and demand patterns will change marginally in September.
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