Analysis on the development trend of China's PVC industry in 2021, and the production capacity tends to be stable

1、 Overview of PVC industry development

Polyvinyl chloride (PVC) is a polymer polymerized by vinyl chloride monomer (VCM) with peroxide, azo compound and other initiators or by free radical polymerization reaction mechanism under the action of light and heat. It is an important category in synthetic resins.

Polyvinyl chloride resin is mainly divided into general resin and paste resin according to its purpose: general resin (g resin) is a resin formed by mixing normal amount of plasticizer or additives to form dry or wet powder; Paste resin (P resin) is usually mixed with plasticizer to form paste resin for use; In addition, there is PVC mixing resin, which is a kind of PVC resin that replaces part of the paste resin by mixing when preparing PVC plasticized paste.

The main production methods of PVC resin include suspension method, bulk method, lotion method, solution method and micro suspension polymerization method. In the world, suspension method is the main production method of PVC general resin, while the production methods of PVC paste resin are lotion method and micro suspension polymerization method. Due to different production processes, the capacity of the two resins cannot be converted to each other.

2、 PVC industry chain

PVC production process is mainly "calcium carbide method" and "ethylene method", and its raw materials are coal and crude oil respectively. Most countries in the world use oil and gas routes. Due to poor oil and rich coal in China, calcium carbide process is the main PVC production process in China.

The raw material for PVC production by carbide method is coal. Since 2012, China's raw coal output has shown a trend of first decreasing and then increasing. According to the data of the National Bureau of statistics, the national raw coal output will reach 4.13 billion tons in 2021, an increase of 228million tons over 2020.

The raw material for PVC production by ethylene method is crude oil. According to the data of the National Bureau of statistics, China will produce 198.98 million tons of crude oil in 2021, up 4.06 million tons from 2020. Among them, 16.47 million tons of crude oil were produced in December, a year-on-year increase of 1.7%.

3、 Development status of PVC industry

With the rapid development of the national economy, China's PVC production capacity is rapidly increasing. Since 2007, China's PVC production capacity has shown an overall growth trend. According to the data of China Chlor Alkali Industry Association, the total production capacity of PVC in China will reach 27.13 million tons / year in 2021, an increase of 490000 tons / year compared with 2020.

Affected by cold wave, hurricane, flood and other factors, the commencement of PVC plants in the United States, Europe and other places has been greatly restricted, the supply in the international market has been tightened, and the price has risen rapidly. The import volume of domestic PVC decreased significantly, the proportion of import volume of general trade fell, and the import mode of processing with imported materials became the dominant again. According to customs statistics, in 2021, China imported 399000 tons of pure PVC powder, a year-on-year decrease of 57.9%,

In 2021, supported by the tight supply of foreign goods and the continuous rise of prices, China's PVC export volume increased significantly, but the contradiction of tight ocean transportation capacity was more prominent in the second half of the year, which limited the further growth of China's PVC export volume. According to the data, in 2021, the cumulative export volume of PVC pure powder in China reached 1.754 million tons, an increase of 177.8% year-on-year.

In terms of export destinations, China's PVC pure powder products are mainly exported to South Asia, Southeast Asia and some parts of Central Asia. India is still the main destination for China's PVC pure powder exports. In 2021, China's PVC pure powder exports to India reached 304000 tons, accounting for 17.33% of China's total exports; The PVC pure powder exported to Vietnam is 220000 tons, accounting for 12.5%; 160000 tons of PVC pure powder exported to Bangladesh, accounting for 9.1%.

Polyvinyl chloride (PVC) paste resin as the name suggests is that this resin is mainly used in the form of paste. People often call this paste plasticized paste, which is a unique liquid form of PVC plastic in the unprocessed state. Paste resins are usually prepared by lotion and micro suspension methods. According to the data of the General Administration of customs, in December 2021, the import volume of paste resin in China was 6300 tons, a decrease of 34.5% over the same period in 2020; In December, the export volume of China's paste resin was 9200 tons, a sharp increase of 452.7% over the same period in 2020.

In 2021, China imported 84600 tons of paste resin in total. Domestic paste resin was mainly imported from Taiwan, China, Germany, Malaysia and other places, accounting for 30.66%, 28.49% and 13.76% respectively in 2021.

In 2021, China exported 77000 tons of paste resin, of which 16300 tons were exported to India in 2021, accounting for 21.1% of the total export volume; 15500 tons were exported to Turkey, accounting for 20.1%; 9400 tons were exported to Vietnam, accounting for 12.2%.

4、 PVC industry related policies

In March, 2021, the Inner Mongolia Autonomous Region officially issued several safeguard measures to ensure the completion of the dual control objectives and tasks of energy consumption during the 14th five year plan. The measures require that a series of high energy consuming industries such as PVC, caustic soda and soda ash will no longer be approved during the "fourteenth five year plan". If it is necessary to add new capacity, the capacity and energy consumption shall be reduced and replaced. This means that in the future, the PVC production capacity of Inner Mongolia Autonomous Region, a major energy province, will be reduced but not increased. Inner Mongolia is a major PVC production province in China. The entire northwest region accounts for 49.2% of the national capacity, while Inner Mongolia accounts for about 37% of the northwest region's capacity, that is, about 18.2% of the national capacity.

5、 Development trend of PVC industry

In the next 10 years, the domestic PVC industry will further withdraw from the market and enter the park, realize the centralization of the industry, reasonably adjust the industrial structure, and make resources and logistics convenient, which will be the favorable chips for enterprises to realize profits and obtain competitive advantages. In the process route, the coexistence of carbide method and ethylene method will continue, but the proportion of ethylene method will further expand, gradually get rid of the dependence on acetylene method, and make positive contributions to reducing environmental pollution and realizing sustainable development. The current Jiangzhong method will be a positive and positive aspect, but it needs to be verified in actual production.

In short, under the severe safety and environmental protection situation, in the fierce market and price competition, and under the gradual adjustment of overcapacity, the PVC industry will gradually become calm and rational, and walk out of a road of high resource concentration, special oriented development, multi brand and high-quality development. The production capacity will be concentrated in the coastal and western regions, and large-scale and cross regional operation will become the mainstream. This can be seen from the change trend of domestic production capacity in recent years. The stable change of production capacity often reflects the rationalization of industry development. At the same time, unexpected factors in the market have a short-term impact on the development of the industry, especially the impact of epidemic factors, which directly impact on all links, affect the relationship between supply and demand, test the development of the industry, and also bring opportunities to the industry. Even in the post epidemic Era, differences in different regions have brought short-term considerable profits to some regions. After rational analysis, remember to expand blindly and deteriorate the ratio of production capacity to output, and pay more attention to improving quality and reducing consumption. Improving individualized, customized and specialized resins may be the key direction for the development of some PVC enterprises in the future.

The development of PVC in China is undergoing a transformation from large to strong, from low-end products to high-end products, and from simplification to diversification. However, there is still a long way to go from a large PVC producing country to a powerful one. PVC enterprises also need to enhance their ability of independent innovation and strengthen the construction of talent teams. From auxiliary raw materials to process equipment and process control, to product packaging and transportation, and finally to downstream processed products to form a whole life cycle improvement. Achieve downstream verification and upstream, promote each other, develop and grow together, achieve high-quality green development of the industry, and contribute to the strength of the chlor alkali industry for the progress of national industrial science and technology and industrial power.