In May, PVC prices were weak and fell, or rebounded and fluctuated in June

[introduction]

In May, the domestic PVC market price was weak and downward, mainly because the downstream start-up of the terminal was limited, and the demand improved significantly. The expectation was not fulfilled. In June, the expectation of demand recovery still exists. There are still many PVC maintenance enterprises, and the fundamentals may improve. It is expected that PVC prices will rebound at a low level, but the rebound range still needs to pay attention to the degree of demand recovery.

Key words: weak downward trend, demand less than expected, fundamentals improved, rebound shock

PVC price: in May, PVC price fell anti seasonally

In May, the average monthly price of China's SG-5 was 8742 yuan / ton, down 4.04% month on month and 6.19% year-on-year. The price was above the average level in the past five years. According to the seasonal fluctuation characteristics of PVC in recent years, the maintenance increased in May, the demand was in the small peak season, and the price was generally in the upward stage. However, from the market trend of this year, the PVC market fell over the season in May, mainly because the domestic demand improvement expectation was not fulfilled, and the domestic demand performance was poor.

PVC supply and demand: the supply and demand gap decreased slightly in May, but the year-on-year increase was large

In May, the total supply and demand of PVC increased slightly, but the supply increment slightly increased the total demand, so the supply-demand gap decreased slightly. In May, the PVC supply-demand gap was estimated to be 784000 tons, a month on month decrease of 5.09%, but a year-on-year increase of 75.93%. Separately, in May, the maintenance at the supply end was concentrated, the operating load rate of PVC industry decreased, and the import was still at a low level; On the demand side, the downstream start-up of the terminal increased slightly in May, but the increase was limited, and the export volume decreased slightly compared with April.

Although the supply-demand gap decreased slightly in May, the fundamentals improved less than expected, mainly due to weak demand side performance. April May is usually the traditional peak season for PVC, and the terminal demand remains high. However, in April this year, the downstream construction was poor. Taking the largest downstream PVC pipe as an example, the construction of some pipes in April was 5-60%, and the market expected that the construction of pipes in May would increase to 8-90%, but in fact it only increased to 6-70%. Therefore, the demand expectation has not been fulfilled, which is bad for the mentality of market participants. In May, the overall PVC price fluctuated downward.

Outlook in June: the fundamentals are expected to improve, with focus on demand

In May, the fundamentals of PVC market improved less than expected, and the price fell anti seasonally. For the PVC market in June, first of all, from the historical experience, there were still many maintenance enterprises at the supply side in June, the demand side weakened slightly, and the supply and demand side was expected to weaken, but there would be no obvious contradiction for the time being. According to historical data, the year of increase in June in the past 15 years accounted for 53%, but the increase will slow down. For the PVC market in June this year, the main factors affecting the market trend are as follows:

Demand: the demand in June is expected to increase, but the room for improvement may be limited

From April to may, the start-up of downstream end product enterprises was poor. In June, some downstream end enterprises may receive orders through promotion, and the start-up is expected to increase slightly. However, at present, the real estate industry has not improved significantly, and the new orders received by product enterprises are insufficient. In addition, the weather in June is hot, which is the traditional off-season in the downstream. Therefore, it is expected that the end demand in June will increase, but the range is limited.

In terms of supply, the operating load rate of high maintenance loss industries may decline

In June, there are relatively many PVC maintenance devices, and the maintenance time of some devices is long. It is estimated that the final maintenance loss may reach about 220000 tons. The operating load rate and output of PVC industry in June decreased slightly compared with that in May.

In terms of cost, the price of calcium carbide has limited room to fall, and the cost of PVC is supported to a certain extent

The contradiction between supply and demand of calcium carbide in June may be slightly better than that in late May, but the improvement is limited. It is expected that the market will still maintain a surplus supply for most of the time. It does not rule out that there is still a small downward space for the price in the first half of June. The second half of June mainly depends on the supply and demand game and the decline in the first half of June. It is expected that it will remain low. In the case of limited decline in the price of calcium carbide, if the price of PVC continues to decline, the single product of PVC enterprises that purchase calcium carbide may gradually approach the cost line. From the perspective of raw materials, the PVC cost end in June has some support.

Macro and mentality: market mentality tangled with great uncertainty

On the one hand, the tangled market mentality is the uncertainty of the improvement of PVC fundamentals, and the market still has great differences on whether the demand can be improved; On the other hand, the macro aspect is mixed with long and short. On the periphery, the Federal Reserve raised interest rates and reduced the table in June, which may be bad for the mentality of market participants. However, market participants still have expectations for domestic loose and good policies under the expectation of stable growth.

According to the above analysis, the maintenance loss of PVC in June is high, and the demand may increase. In addition, there is support on the cost side, so the fundamentals may improve in June, but there is uncertainty on the macro side. It is expected that the PVC market may rebound and fluctuate in June, but the rebound height needs to focus on the recovery of demand.