PVC callback probability of blocked destocking is large

- Jul 06, 2019-

At present, the preliminary maintenance enterprises resume production successively, while the demand enters the seasonal slack season, and the imbalance between supply and demand results in inventory accumulation, and the PVC price may be adjusted back in July.

Strong cost support

As the summer season approaches and peak demand sets in, parts of the northwest are experiencing power shortages.

As a result, some enterprises in Inner Mongolia are restricted in their power consumption, which leads to the decrease of stopping or starting load of local calcium carbide production enterprises.

Not only that, shaanxi, ningxia and other home appliances stone production enterprises are also closed, the domestic calcium carbide supply is tight.

At the same time, due to the strong expectations of downstream PVC production, calcium carbide will appear in the later supply and demand mismatch phenomenon, which will cause PVC manufacturers to scramble for raw materials, thereby stimulating calcium carbide price rise.

However, it needs to be noted that at present, the profit of PVC production enterprises using calcium carbide method is about 1000 yuan/ton, which is relatively rich. Therefore, the supporting effect of cost on the price of PVC is weakened to some extent, and the profit of PVC production enterprises will be compressed in the later period.

Increased supply

In June, the overhaul of domestic PVC production enterprises was relatively intensive, and the starting load dropped from 90% in April to 74.29%.

Starting load reduction leads to PVC market overall supply tight, which is the recent PVC period, spot prices generally rise the main reason.

In the overseas market, the failure of PVC production equipment in Brazil and the gap in PVC supply in the foreign market stimulated the export of domestic PVC and objectively reduced the supply in the domestic market.

However, according to the information released at present, PVC production enterprises that have been inspected in early stage such as zhongtai chemical, xinjiang tianye and zhongyan jilantai will resume production successively at the end of June and the beginning of July. Therefore, on the whole, the supply of PVC in the domestic market in July will be more abundant than that in June, and the support of the price of PVC at the supply end will be weakened.

On the other hand, with the arrival of high temperature weather, downstream pipe, profile enterprises into the consumption off season, the enterprise more to buy and use the strategy stock.

At the same time, construction in the south is relatively slow, further reducing the market demand for PVC downstream products.

In this case, July PVC downstream consumption difficult to pick up.

Inventory, the current domestic PVC petrochemical inventory has returned to normal levels, but the social inventory is still high.

By June 28, the domestic PVC petrochemical inventory was 27,200 tons, down by 10,600 tons or 28.04% compared with the same period last year.

The social inventory of PVC was 491,420 tons, 131,520 tons more than the same period last year, with an increase rate of 36.54%.

July market consumption went weak, downstream enterprises to digestion of their own inventory, not eager to replenish inventory.

While upstream supply increases, petrochemical stocks may accumulate, which may stimulate manufacturers to cut prices.

In summary, PVC supply will increase in July with the resumption of production of the pre-maintenance devices.

At the same time, as the downstream enters the seasonal slack season, the market will be in the phase of oversupply situation.

In this case, the original high PVC inventory will be further accumulated, thus stimulating enterprises to reduce inventory.

Therefore, even if the upstream calcium carbide price rises, the probability of PVC weakening is still greater.