China’s PVC Industry Inventory Piled Up Notably After National Day Holiday
Introduction: After the National Day holiday every year, the PVC industry inventory tends to increase, and this year is no exception. According to sample survey data from SCI, the inventory growth rate this year is significantly higher than that of last year, which indirectly indicates that the supply pressure in the industry continues to rise this year.
PVC inventory rose rapidly after the holiday.
During the National Day holiday, PVC producers generally maintained stable operation rates, while some downstream enterprises suspended production for the holiday - this leads to a certain increase in supply pressure, which is reflected in the rising inventory data.
2024-2025 China PVC Inventory Change After the National Day Holiday
As of October 9, the sample PVC producers’ plant inventory reached 337.3kt, an increase of 91.65kt compared with that before the holiday - significantly higher than the 45.65kt increase in the same period last year. Meanwhile, the available inventory of PVC producers stood at -134.15kt as of October 9, up 273.15kt from the pre-holiday level, which was also significantly higher than the 92.88kt increase last year.
As of October 9, the expanded-sample social inventory in East China and South China reached 937.5kt, an increase of 43kt compared with the pre-holiday period - far exceeding the 2.2kt increase in the same period last year.
PVC social inventory reached a record high. As of October 9, the expanded-sample social inventory in East China and South China was 937.5kt, a year-on-year increase of 17.73%. However, PVC producers’ plant inventory showed little change compared with the same period in previous years. As of October 9, PVC producers’ plant inventory was 337.3kt, down 1.08% YoY. Although the available inventory of PVC producers was slightly higher year-on-year, orders still exceeded inventory, and the overall sales pressure on PVC producers did not increase significantly.
Overall, the increase in PVC inventory pressure this year is mainly reflected in social inventory, with the ownership of most social inventory concentrated in the hands of traders. This situation arises because traditional trading methods are barely profitable; moreover, spot prices have been lower than futures prices over the past two years, making cash-and-carry arbitrage (buying spot while selling futures) the primary operational model for traders. Earning profits from a strengthening basis is a relatively safe strategy at present, which is why traders are also willing to hold spot goods.
Deteriorating supply-demand fundamentals are the primary driver for the inventory growth.
Whether inventory accumulates at the trader level or the producer level, it reflects mounting supply pressure in the PVC industry. According to SCI, cumulative new PVC capacity added from January to September reached 1,700kt/a. In addition, operating rates of most existing PVC units remained high. PVC output from January to September totaled 17,992.87kt, a year-on-year increase of 2.91%. Meanwhile, domestic demand remains weak: estimated domestic PVC demand from January to September stood at 15,093kt, a year-on-year decrease of 1.98%.
Another reason for the particularly significant growth in social inventory this year is the slight distortion in inventory growth data in 2024. In September 2024, several new delivery warehouses were added in North China, but these warehouses were not included in the inventory statistics, leading to a certain diversion of goods. Additionally, transportation restrictions on PVC shipments from Xinjiang last year disrupted the arrival of some cargo, further affecting inventory calculations.
China Newly Constructed PVC Unit Status
High PVC inventory may persist in the future.
The PVC supply may remain high. In October, new PVC capacity may be released in October. The PVC industrial operating rate will possibly be relatively high. China’s domestic demand may fail to improve notably. Thus, the PVC market may face notable supply pressure. Exports serve as a key factor in resolving the supply-demand imbalance. However, with the implementation of India’s anti-dumping plan, China’s PVC export destinations need to be restructured, which may exert a certain impact on exports in Q4. Oversupply may be the main price driver for the PVC market in Q4.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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