China PVC Paste Prices to Hover at Highs Amid Tight Supply
Preface: China’s PVC paste demand from downstream industries was stable from August, while supply was tight, propping up PVC paste prices. The change in fundamentals and market sentiments should be concerned. SCI reckons that China’s PVC paste prices will hover at highs in the short term.
China’s PVC paste prices saw an upward trend from end-June. Up to August 14, mainstream prices of general materials in East China were RMB 7,900-8,500/mt, averaging RMB 8,200/mt, up RMB 1,100/mt or 15.49% compared with that on June 20. The increment in the PVC paste price was higher than expected affected by improved demand.
PVC paste supply shrunk notably affected by intensive unit maintenance.
In end-June, the unplanned shutdown of several units dragged down the PVC paste output. Except for producers who underwent long-term maintenance, three PVC paste producers arranged maintenance in July, involving 430kt/a capacity. In addition, due to tight feedstock supply, the operating rate at Shandong Langhui Petrochemicals was 50%. In July, the monthly PVC paste output was 67.4kt, down 19.85% M-O-M. In August and September, a couple of PVC paste units are planned to undergo maintenance.
China PVC Paste Unit Maintenance Statistics
Downstream demand was fairish, though it was in the slack season.
Most downstream industries are in the traditional slack season in July and August, giving thinner demand support to the PVC paste market. PVC glove products are the main consumer of glove materials. In July, foreign orders for glove products were underperformed, and the overall operating rate of the glove industry was less than 30%. However, the USD price of glove materials rose, and China’s glove materials supply moved down caused by unit maintenance. Thus, downstream enterprises purchased on a need-to basis and engaged in bargain-hunting. In July and August, the hot weather affected operating rates in general materials downstream industries. However, extreme weather exerted a bad effect on cargo transportation. Thus, PVC paste prices moved up constantly due to tight supply. Stimulated by the increment in the price, some buyers showed higher interest in stockpiling.
On the whole, though July and August are the traditional slack seasons, PVC paste prices saw constant growth backed by tight supply. Downstream enterprises showed higher interest in stocking up.
In the short term, the PVC paste market supply may still be tight, though a couple of producers will possibly resume production. Most PVC paste producers hold bullish sentiments amid low inventory and orders to be delivered. Downstream enterprises faced declined profits amid rising feedstock and tepid orders. Thus, whether the PVC paste price increase can be transmitted to the downstream product price needs to be seen. It is expected that China’s PVC paste prices will increase, but the growth rate may narrow down. The change in market demand should be noticed.
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