Profits in China PVC industry Improved in Dec
Preface: Profit losses in China’s PVC powder industry eased further because PVC powder market prices inched up while feedstock prices inched down. Profits at caustic soda and PVC integration producers turned losses into gains. SCI reckons that PVC powder producers will still face profit losses as feedstock prices can hardly drop while PVC powder prices may lack upward momentum.
PVC powder market prices fluctuated upwards with buyers’ procurement enthusiasm increasing from December. Prices of PVC feedstock were different, leading to various profits from producing PVC via different technologies. However, the overall feedstock prices inched down.
Profit losses at calcium carbide-based PVC powder producers eased further.
Taking outsourced calcium carbide-based PVC producers in Shandong as an example, in early December, the profit loss was around RMB 1,700/mt, but it declined to RMB 1,000/mt or so up to December 15.
There were mainly two reasons for easing profit losses at calcium carbide-based PVC powder producers. First, calcium carbide prices edged down amid the slight increment in supply, dragging down calcium carbide-based PVC powder cost. Second, PVC powder prices fluctuated upwards with downstream users engaging in bargain-hunting and macro atmosphere improving. Participants hold positive attitudes toward the PVC market of next year.
Imported VCM-based PVC production profits were fairish.
Profits from imported VCM-based PVC production continued to move up in December. In early December, the profit was around RMB 920/mt, while it rose to RMB 1,300/mt or so in mid-December. There were mainly two reasons for possible profits at imported VCM-based PVC producers. First, imported VCM prices remained low, dragging down ethylene-based PVC costs. Second, ethylene-based PVC prices fluctuated upward.
Profits at outsourced ethylene-based PVC producers turned losses into gains.
In early December, the profit at outsourced ethylene-based PVC producers was RMB -147/mt, while it rose to RMB 150/mt in mid-December. Profits at outsourced ethylene-based PVC producers turned losses into gains, with ethylene prices remaining low and ethylene-based PVC prices fluctuating upwards.
Profits at Caustic soda and PVC integration producers turned losses into gains.
First, profit losses in the PVC industry eased further. Second, liquid nitrogen prices increased from RMB -900/mt to RMB -600/mt. Third, caustic soda prices inched up. Thus, Profits at Caustic soda and PVC integration producers turned losses into gains. In early December, the profit at Caustic soda and PVC integration producers in Shandong was RMB -380/mt, while it was RMB 290/mt in mid-December.
With the PVC industry operating rate rising slightly, calcium carbide demand increased, which raised PVC powder cost. Calcium carbide prices see a slight increment recently caused by increased demand with the PVC industry operating rate rising slightly. Production costs may inch up, while PVC prices are expected to be range-bound amid weak fundamentals. Thus, PVC producers may still face profit losses in the near future.
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