The overall inventory of PVC powder decreased in July, and there is still a slight improvement in the fundamentals expected in August

【 Introduction 】 In July, the supply and demand fundamentals of PVC resin powder improved, with a slight increase in the supply side operating load rate, a slight increase in export orders, a slight improvement in domestic demand, a significant decrease in corporate inventory, and little change in social inventory. The operating load rate in August may continue to increase, and domestic demand is expected to have little change. The external market may remain relatively strong, and there may still be expectations of a decrease in inventory in August, but the magnitude is not significant.

In July, the fundamentals of PVC resin improved slightly, and overall inventory was mainly maintained during the month. Among them, the inventory of upstream enterprises decreased significantly. As of July 27th, data showed that the sample inventory of upstream enterprises was 368600 tons, a decrease of 8.42% compared to the end of June and a 14.85% increase compared to the same period last year. The high level of social inventory fluctuated, with 425200 tons of inventory in sample warehouses in East and South China as of July 28th, an increase of 0.73% from the end of June and a year-on-year increase of 19.94%. The marginal improvement in fundamentals is mainly supported by export volume and slight improvement in domestic demand.

Export volume of PVC resin has improved in terms of supply and demand

The concentration of supply side maintenance decreased in July, but there were unplanned shutdowns, and the increase in industry operating load rate was limited. The estimated operating load rate of PVC resin powder in July was 72.92%, an increase of 3.27 percentage points compared to 69.65% in June. The estimated production of PVC powder in July is 1896755 tons, an increase of 7.79% compared to June and a decrease of 0.69% compared to last year.

The performance of domestic demand is average. In July, the construction of profile sample enterprises remained at the previous level, while the construction of large and medium-sized enterprises was around 50%. The hot weather in July, real estate and home decoration gradually entered the off-season, and product orders were poor. Some enterprises had certain export orders. The construction and orders of pipes and other products have not shown significant improvement.

Export demand has significantly increased, and the international market buying intention has significantly increased in July. International prices have continued to rise. The FOB supply of calcium carbide PVC resin powder in Tianjin ranges from 700 to 765 US dollars per ton, while the supply price of ethylene resin powder is 20 to 40 US dollars per ton higher. Most major export enterprises have significantly improved their orders, especially the export order volume of ethylene PVC resin enterprises.

It is precisely due to the increase in export volume that enterprise orders have improved, and domestic speculative demand has also improved. Upstream inventory has rapidly decreased, while terminal demand has performed mediocrely, with an increase in planned delivery merchants. Therefore, social inventory remains high.

For August, it is expected that the operating load rate on the supply side will continue to increase, while domestic demand is expected to have little change, and exports may continue to be strong. There is still expectation of improvement in the fundamentals of PVC resin, but the magnitude is not significant.

Planned maintenance companies may reduce the operating load rate of PVC resin in August and increase it

The number of companies planning maintenance for suspended PVC resin in August is expected to decrease. Currently, there are 5 PVC powder companies planning maintenance in August, which is expected to decrease compared to the maintenance loss in July. The industry's operating load rate may increase in August, and supply side production will slightly increase.

Balance of trade in August are expected to continue to increase

From the perspective of the domestic market, the follow-up is still in the process of bottoming out, and the goodwill of overseas buying will still be maintained. However, some devices in the United States have maintenance plans from August to September, and Taiwan Formosa Plastics PVC resin also has maintenance plans in August, which will reduce the international market supply. The follow-up will continue to be beneficial for the export of PVC resin to the Chinese market, so it is expected that the actual delivery volume of PVC resin exports will further increase from July to August.

Domestic demand may not change much in August

In terms of domestic demand, it is expected that the operating load of PVC powder downstream product enterprises will not change significantly in August. Downstream product enterprises have no improvement in their subsequent orders, and some have certain product inventory, which is resistant to high priced raw materials. It is mainly to restock on low demand, and it is expected that domestic demand will be difficult to increase.

Overall, there is a decrease in planned maintenance companies in August, with a slight increase in supply side production expected. The domestic performance on the demand side is average, and it is expected that there will be difficulty in increasing demand. In addition, the export order volume in July is expected to increase, and the export delivery volume in August may continue to increase. Moreover, there is still a strong expectation for exports in August. So for August, the main support for fundamentals will still come from the export market. If the export market continues to increase volume, there is an expectation of further inventory decline.