Oct PVC Prices Presented Declines After Growth
Preamble
In October, PVC market prices saw violent fluctuations, greatly advancing and sharply declining. Participants’ sentiment affected the market greatly. With bearish sentiment further released, the PVC industry chain will change a lot. PVC prices are projected to rebound after the market sentiment comes back to the right track.
China’s PVC market prices were boosted in H1 October, but then the prices began to drop sharply in mid-October, with wide price spread. As of October 26, the monthly average price of SG-5 in East China was RMB 12,697/mt, up RMB 2,230/mt or 21.31% M-O-M. Meanwhile, the highest price achieved RMB 14,493/mt on October 12, while the lowest price fell to RMB 11,150/mt on October 26.
The influential factors for notable changes in PVC prices involved macroeconomic situation, participants’ stances and supply-demand fundamentals. In the first half of October, calcium carbide prices remained in an uptrend on deficient supply, underpinning PVC prices greatly from the cost side. PVC prices recorded high. Since mid-October, PVC prices lost ground due to the weakened fundamentals and plunged futures prices.
After the price of PVC fell sharply, the market bubble has disappeared, but the pessimism has not ended. The market will perform weakly because of market unease in the short run, but in the long run, the market is predicted to rebound, mainly affected by fundamentals.
PVC prices dropped notably after rising in line with surged coal prices. At present, the bearish sentiment prevails widely in the market, and it is estimated that participants will continue to adopt a pessimistic approach to the PVC market in the near term.
At outsourced calcium carbide-based PVC producers, they were pressured by lowered profits, even if calcium carbide prices also began to head down. According to the assessment, their production cost will decrease to RMB 10,000/mt or so, if calcium carbide prices present a drop of at least RMB 2,000/mt. However, the possibility that calcium carbide prices decrease by RMB 2,000/mt will be low, although calcium carbide prices will decline at a quicker rate. That will also pull PVC prices down. For PVC supply, it is increasing gradually, but the supply-demand balance doesn’t worsen noticeably.
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