As of the end of last week, calcium carbide-based PVC prices in East and South China remained above 7,300 yuan per ton, with some offers reaching as high as 7,500 yuan. Meanwhile, ethylene-based PVC was also around 7,500 yuan, with top offers hitting 7,600 yuan. Although transaction volumes were not particularly high, prices continued to rise steadily, marking a reversal from several months of decline.
The recent price increase can be attributed to several key factors:
First, a 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 1 this year, has significantly raised production costs. This has led to a sharp upward trend in calcium carbide prices, especially in the northwest region, which had been struggling for a long time. The sudden surge in calcium carbide prices caught PVC manufacturers off guard, leading to temporary supply shortages and further fueling the price climb. As the price increase spread across the country, it triggered a nationwide upward trend in calcium carbide, directly increasing the cost of PVC production and helping the previously weak PVC market regain momentum.
Second, rising crude oil prices have also contributed to the situation. Current crude oil prices are above $66 per barrel, with expectations that they will soon surpass $70. This surge has significantly increased the cost of ethylene-based PVC, along with higher transportation expenses for raw materials.
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. Additionally, some large plants have faced production delays due to installation issues. These limitations have had a noticeable impact on domestic PVC supply. At the same time, some enterprises have delayed expansion or production due to various challenges, meaning the expected increase in supply has not yet materialized. In the first half of the year, domestic PVC production reached 3.124 million tons, up 28.5% year-on-year. Of this, 2.102 million tons came from the calcium carbide method, and 1.022 million tons from the ethylene method. However, actual production was lower than anticipated, and new capacity is expected to come online mainly in the second half of the year.
Fourth, industry confidence has improved. One of the most important factors in the current market is the sentiment among industry players. Despite the fact that total domestic PVC supply (production plus imports minus exports) is nearly the same as last year, the market environment has changed dramatically. Previously, panic and uncertainty led many to exit the market. In early August, the China Chlor-Alkali Industrial Association held a PVC industry conference in Dalian, offering reassurance to market participants. Following this event, the market began to recover strongly.
Currently, downstream demand is gradually picking up, and the PVC market continues to surprise with its resilience. However, with numerous uncertainties remaining in the second half of the year and rapid increases in PVC production, it’s important not to become overly optimistic. In the long term, excessively high or rapidly rising PVC prices are not sustainable. To maintain stability, rational operations and cautious management are essential.
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