Improvements in Fundamentals and Macro Market Boost China PVC Powder Prices
Preface: The PVC powder prices rebounded this week. There are expectations for improvements in fundamentals and the macro market next week. Thus, it is expected that China’s PVC powder prices may fluctuate upward in the short term.
From August 16 to August 21, prices of SG-5 in East China hovered at RMB 5,350-5,440/mt.
First, PVC fundamentals improved slightly. Export orders increased further this week, easing sales pressure on PVC producers. Social inventory in East China moved down. Second, Macro atmospheres warmed up. Issuance of government bonds accelerated. In addition, there were expectations that the pace of land acquisition and storage in the real estate sector would accelerate. Moreover, the implementation of funding for real estate whitelist projects was supported. The futures prices of black steel-related products supported the macro atmosphere. PVC futures prices rebounded.
There are expectations for improvements in fundamentals and the macro market next week. Thus, it is expected that China’s PVC powder prices may fluctuate upward in the short term.
Supply: More unit maintenance may drag down the PVC industrial operating rate, easing supply pressure to some extent.
Demand: Downstream enterprises will possibly engage in bargain-hunting. Though their orders underperform, they stockpile as PVC prices drop to a low level. With PVC futures prices rebounding, hedgers may show higher purchasing interests. As for exports, export orders increased in the last two weeks. There will be an announcement next week on whether BIS will be delayed.
Related products: Calcium carbide purchasing prices may change limitedly, failing to give stronger cost support to the market. Calcium carbide arrivals have remained stable recently. Some PVC producers cut purchasing prices. However, considering the affordability of calcium carbide producers, purchasing prices may be stable in the next week. Due to the drop in the caustic soda industrial operating rate, liquid caustic soda prices in Shandong inched up. SCI reckons that the caustic soda prices may be stable-to-increasing next week.
Macro market: There are expectations for the Fed’s interest rate cuts. More loose monetary policies in China are projected.
It is expected that China’s PVC powder prices may fluctuate upward in the short term.
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