Until the end of last week, PVC prices in East and South China using the calcium carbide method were above 7,300 yuan per ton, with the highest offers reaching 7,500 yuan. Meanwhile, ethylene-based PVC was also around 7,500 yuan, with some offers hitting 7,600 yuan. Despite limited transaction volumes, prices remained resilient, showing a gradual upward trend and finally ending a months-long decline.
The recent price increase can be attributed to several key factors. First, the national rise in calcium carbide prices has played a major role. In Inner Mongolia, an increase in electricity tariffs by 0.0157 yuan per kWh, effective since June 1st, has significantly raised production costs for calcium carbide. This led to a sharp increase in local prices, which had previously been depressed in the northwest region. The sudden jump in calcium carbide prices caught PVC manufacturers off guard, causing supply shortages and further pushing up PVC prices across the country.
Second, rising crude oil prices have added pressure on the ethylene-based PVC sector. With current oil prices exceeding $66 per barrel and expected to surpass $70 soon, the cost of raw materials and transportation has surged, increasing production expenses for ethylene-based PVC.
Third, the operating rates of PVC producers remain low. Ethylene-based PVC companies have struggled to operate at full capacity due to high raw material costs, while some large plants faced production delays due to installation issues. These factors have limited domestic supply, especially given that many companies had planned for increased output but failed to meet expectations. In the first half of the year, domestic PVC production reached 3.124 million tons, a 28.5% increase from the previous year. However, actual output fell short of projections, with new facilities likely to come online in the second half of the year.
Fourth, industry confidence has improved. A key driver of this market shift is the changing sentiment among industry players. Although total domestic PVC supply (production plus imports minus exports) is nearly the same as last year, market conditions have taken a different turn. Previously, panic and uncertainty dominated, leading many to exit the market. However, the August conference held by the China Chlor-Alkali Industrial Association in Dalian helped restore confidence, and the market followed suit with a strong rebound.
Currently, downstream demand is slowly recovering, and the PVC market continues to surprise with its resilience. However, with many uncertainties ahead and a rapid rise in production, it’s important not to get overly optimistic. In the long run, excessively high or rapidly rising PVC prices are not sustainable. To ensure market stability, maintaining rational operations and avoiding over-speculation should be the top priority.
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