2021 PVC Price Refreshing a New high with Insufficient Supply
Preface: 2021 was a year to witness history in the PVC powder market. PVC prices recorded high in mid-October 2021, and the annual average price also increased greatly. The price fluctuation range also widened.
2021 was a year to witness history in the PVC powder market. The PVC price rose constantly, breaking record highs in H2 of the year. The lowest price appeared on January 14, and the SG-5 price in East China was RMB 7,100/mt. The highest price appeared on October 12, and the SG-5 price in East China was RMB 14,493/mt. In 2021, the SG-5 market average price in East China was RMB 9,189/mt, up RMB 2,548/mt or 38.37% from the yearly average price of 2020. Factors affecting the PVC powder market in 2021 included the loose monetary policy, the surge in export volume, the production curtailments on the supply side, as well as the notably higher costs.
Surged export volume and loose monetary policy propelled the price increment of PVC from January to May.
Before the Spring Festival holiday, due to the Federal Reserve’s loose monetary policy and the general quantitative easing prospect, commodity prices generally trended upwards. In mid-February, over half of PVC powder units in the U.S. were shut down due to a cold wave. The PVC demand increased due to the prosperous real estate market in the U.S., and the PVC powder export volume of China went up bolstered by the high PVC price in the international market. After mid-March, the rapidly rising calcium carbide price lent substantial cost support to the PVC powder price.
According to the GACC, China’s PVC powder export volume was 1,754.3kt in 2021, registering Y-O-Y growth rate of 178.98%. Therein, the export volume remained above 200kt between March and May. The surge in export volume led to a lower inventory level in 2021 than past few years. As seen from the below chart, PVC powder inventory in East China and South China accumulated limitedly in Q1, 2021 and declined rapidly from Q2 to Q3. In Q4, PVC inventory began to be slightly higher than that in previous years.
Prices were ranged-bound around highs between June and August.
China’s PVC powder market prices inched down between June and August due to the decreasing exports, lower feedstock cost and soft demand amid the slack season. On the one hand, previously stopped units in the U.S. resumed production successively, which constrained the export in China. On the other hand, calcium carbide prices saw a draw with its output rising, cutting the cost support to PVC powder prices. Furthermore, the downstream demand for PVC powder weakened slightly amid the rainy season.
Prices saw surges and slashes between September and October.
Operating rates of calcium carbide units declined again after September, which gave wings to calcium carbide prices. Facing higher feedstock costs, PVC powder producers also tapered down operating rates. Besides, the PVC powder export volume increased with the arbitrage window open, providing an impetus to the domestic market. On October 12, SG-5 prices in East China ratcheted up to RMB 14,493/mt, a historical high. However, PVC prices slashed by over 36% within a month, subdued by plunged coal prices.
Prices plunged from mid-October to November.
In mid-October, prices of coal chemicals, represented by coal, collapsed, and calcium carbide prices dropped quickly as well. The cost support to PVC prices was reduced. Besides, PVC supply rose greatly after units’ operating rates were enhanced rapidly. Therefore, PVC prices declined sharply by above 36% within less than a month.
Prices saw a downtick in December but then stabilized from the bottom.
For PVC producers who outsourced calcium carbide, their profits from PVC production went down gradually in December. Higher production cost restricted their enthusiasm in running units, leading to lower operating rates than the same period of 2020. Besides, coal prices stabilized, underpinning the PVC market. PVC producers also enjoyed smooth sales with trading atmosphere warming up. Mainstream prices of PVC inched lower in December, but later, the prices stabilized at lows.
On the whole, the fundamental support to PVC prices was strong in 2021, and the passable market atmosphere also injected impetus into the spot market. The average market price created a historical high. In 2022, PVC market is supposed to catch strong support from the supply side, but the performance of demand will be slightly sluggish. Generally, SCI reckons that mainstream prices of PVC will linger at highs in 2022, but the average price is likely to inch lower from 2021.
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