Apr PVC Supply-Demand Fundamentals to Improve Further
Preface: PVC supply-demand fundamentals turned strong in March. Both PVC supply and demand mounted up, and the export business was active. The social inventory began to decline in mid-March. In April, intensive maintenance is supposed to appear, and operating rates will drop correspondingly. But there will be lots of export orders waiting for delivery, indicating that demand for PVC will continue rising. PVC fundamentals are projected to further improve.
PVC social inventory went down in mid-March with improved fundamentals. As of end-March, PVC powder inventory at East China and South China warehouses was 326.85kt, down 35.45kt or 9.78% M-O-M.
PVC supply-demand fundamentals became healthy in March.
According to SCI, the output of PVC powder in March 2022 was 1,988.339kt, up 13.07% M-O-M and up 1.31% Y-O-Y. There was one more working day in March compared with February. Meanwhile, PVC producers’ profits were strengthened, and the calcium carbide supply was plentiful. Those factors pushed up PVC powder output. The monthly operating rate increased by 1.77% Y-O-Y to 81.76% in March.
The end demand showed a brightened trend. The average operating rate at PVC downstream finished product enterprises recovered to 50%-60%, and that at some PVC soft product enterprises achieved above 50%. In H2 March, operating rates inched down, and the demand for PVC partly weakened. But the overall demand was passable in March. The demand volume of PVC was assessed to be 1,927kt in March, up 45.88% M-O-M and up 6.13% Y-O-Y.
China’s PVC export arbitrage kept underway in March. China’s PVC export prices mounted gradually, and the overseas PVC industry was experiencing demand peak season, so China’s sellers had favorable export orders. SCI reckons that China’s PVC powder export volume will linger around 150-200kt in March.
SCI predicts that PVC supply-demand fundamentals will continue improving in April, but participants need to focus on whether some demands will be postponed.
PVC units’ operating rates are projected to decline in April.
April and May belong to the traditional maintenance season for PVC. According to the maintenance plan we have learned, there have been certain signs of centralized maintenance as of now. In addition to the three long-term parking companies, there are 13 companies undergoing maintenance or planned maintenance, involving a production capacity of 4.01 million tons, which is already higher than the maintenance volume of the 12 companies in April last year. In the later stage, it is not ruled out that there are still more maintenance companies or the planned maintenance companies are delayed, but overall, the centralized maintenance in April is almost a foregone conclusion. It is expected that the operating load rate in April will drop by 2-3 percentage points compared with March.
China Major PVC Unit Maintenance Plans
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China’s PVC powder export volume is expected to stay firm.
In February, China’s PVC exporters enjoyed improved sales, so there were concentrated cargoes delivered in March. In H2 March, the export business was still profitable and kept on going, even if some overseas buyers showed resistance to high-priced China-origin PVC. Given that some cargoes will see delayed delivery, there will be around 140kt of export cargoes to be delivered in April.
PVC demand will revive constantly.
Some downstream enterprises cut back operating rates in H2 March, mainly because of the transport restriction. If the transport recovers, the downstream demand will increase, but the demand continuity is uncertain. Besides, April belongs to the traditional demand peak season, so SCI predicts that overall demand will rally in April.
Heathier supply-demand fundamentals will propel PVC inventory consumption in April.
As seen from the above analysis, SCI estimates that PVC supply will decline, following dropped operating rates amid intensive maintenance in April. PVC demand will be strong with favorable domestic demand and export demand, although some demands are likely to be deferred. China’s PVC import volume is supposed to remain low. Generally, it is predicted that fundamentals will continue to improve, which will give wings to PVC prices in April.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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