Overview of PVC Powder Market
Preface: PVC powder is one of the five general-purpose plastics and is mainly used to produce pipes & fittings, profiles, doors and windows, plates, films, cables, sheets, etc. More than 60% of the downstream demand for PVC powder is related to the real estate industry. It is one of the important listed futures varieties in the plastics industry, and its financial attributes have continued to increase in recent years. This article sorts out the content of the basic knowledge framework of PVC powder and discusses the characteristics of PVC powder.
PVC powder, short for polyvinyl chloride powder resin, is a kind of thermoplastic synthetic resin polymerized from VCM, and it is a white powdery solid.
PVC Powder Industrial Chain
As divided by downstream consumption fields, PVC powder is mainly consumed in the construction industry and industries of other consumables. Therein, the consumption proportion of the construction industry was about 60%. The PVC products consumed in the construction industry can be further divided into hard products such as pipe, profile, and soft products such as film, wire and cable.
Basic Knowledge of PVC Powder
China is the largest producer and consumer of PVC powder in the world. In 2022, China’s PVC powder capacity was 26,420kt/a, taking up around 45.79% of the global total, as the newly added capacity in 2022 is mainly in China. The demand for PVC powder also ranks first in the world. In 2022, the demand for PVC powder accounted for 40.49% of the global total. With the expansion of China’s PVC powder capacity, China’s export volume has gradually increased, while China’s import volume has fallen to a low level.
2018-2022 Global & China PVC Powder Capacity Comparison
2018-2022 China PVC Export Volume and Dependence Degree
China’s current mainstream PVC powder sales are based on dealers or agents. Large-scale PVC powder enterprises distribute to traders, and traders then sell to downstream enterprises. On the one hand, this sales model is due to the separation of production and sales of PVC powder, PVC powder producers are concentrated in Northwest China, and the consumption areas are mainly concentrated in North China, East China and South China. On the other hand, the concentration ratio of PVC powder production is relatively high, but downstream users are relatively scattered, and there are many small and medium-sized downstream enterprises.
PVC powder is a typical domestic demand-driven goods. The proportion of PVC powder exports is relatively small, and the historical export dependence fluctuates between 2%-9%. However, in the past two years, due to the mismatch of global supply and demand as well as the change of internal and external price differences, the proportion of China’s PVC powder exports has increased, becoming a strong supplement to the demand for PVC powder. In 2022, the export volume of PVC powder in China reached 1,965.7kt, and the export dependence rate was 8.8%. However, the import volume remains low due to a lack of cost advantage and arbitrage space, and the import dependence fluctuates between 1%-4% in recent years.
The demand for PVC powder mainly comes from the real estate industry. More than 60% of the downstream demand for PVC powder is related to the real estate industry. The floor space of buildings newly started can represent the demand trend of PVC powder in the construction industry in the future. PVC powder in real estate construction include is mainly used in drainage pipes, which are mainly used indoors (including bathrooms, kitchens and air conditioners), usually in the middle and late stages of construction. The threading pipes/pipe fittings are used from the start and continue until the capping. Profiles are used in the back end of real estate, mainly for plastic-steel doors and windows and have competition with aluminum. Flooring and wall panels are used in the decoration stage. At present, PVC floor is still mainly exported, and wall panels can replace latex paint, wallpaper, etc.
PVC powder is mainly consumed during the later stages of real estate construction. It usually takes around two years from the commencement of construction to the eventual completion. PVC powder is used intensively one and a half years after the start of new construction.
As the floor space of buildings newly started shrunk, the PVC demand from the construction industry showed a downward trend in 2022. Affected by the policy of ensuring timely deliveries of presold homes, the demand for PVC powder is expected to improve in 2023. However, the increment in PVC powder demand may be limited, restricted by the lower floor space of buildings newly started.
The PVC powder market shows typical seasonal characteristics. Since its consumers are mainly in the construction industry, it is significantly affected by seasons and climates. Generally speaking, the PVC powder market is in the dull season in the first quarter and is in the traditional peak season in Q2 and Q4. In Q1, the PVC powder supply is high, while the demand is weak, so PVC social inventory sees an uptrend quickly. The inventory generally moves down gradually from Q2 to Q4.
2018-2022 PVC Powder Inventory at Major Warehouses in East China and South China
As for the production method, based on different feedstock, the production methods are divided into the calcium carbide method and ethylene method. Therein, calcium carbide-based PVC powder capacity takes up nearly 80% of the total. The main feedstock of the calcium carbide-based PVC is calcium carbide, which accounts for about 75% of the cost and is the most important factor affecting cost changes.
PVC powder is the largest consumer of chlorine, and calcium carbide-based PVC powder enterprises are almost matched with caustic soda units, so most enterprises will consider the integrated profit of caustic soda and PVC to adjust the production strategy.
The price of PVC powder is the result of the game between supply and demand, and the dynamic change of supply and demand is the core point that affects the price of PVC powder. The main downstream of PVC powder is the construction industry. Using the relationship between the floor space of buildings newly started and the demand for PVC powder, a potential demand forecasting model for PVC powder can be constructed. Using the seasonality of PVC powder production, the potential supply model of PVC powder can be constructed on the basis of inventory capacity and newly added capacity. In addition, by analyzing social inventory, the beginning inventory can be obtained, so as to build a supply-demand balance sheet.
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