Summary of PVC powder supply end in July and forecast for August

Introduction

Although there were still many PVC powder enterprises undergoing maintenance in July, there was a decrease compared to June. Some enterprises that temporarily parked their vehicles gradually resumed, and the industry's operating load rate increased compared to June; During the month, the price of calcium carbide and PVC powder decreased slightly at the beginning of the month, but then increased slightly. The degree of single product loss significantly decreased compared to the end of last month. Overall, the supply level of PVC powder has improved in July, while cost support has weakened. It is expected that the maintenance of PVC powder production enterprises in August will decrease compared to July, and the supply level may increase again.

The amount of maintenance losses has decreased, and the industry's operating load rate has also increased

In previous years, July was usually a month when PVC powder production enterprises had concentrated maintenance. Compared to previous years, the year-on-year increase in maintenance losses was more significant in July 2023. There were still many repairs to the PVC resin powder plant in July, but some enterprises that had undergone early maintenance or shutdown resumed operations within the month. The loss from maintenance in July decreased compared to June. Meanwhile, the operating load rate of the PVC powder industry in July has increased compared to June. With the increase in the industry's operating load rate and one more natural day in July compared to June, the monthly production has increased significantly compared to June.

According to statistical data, the loss of PVC resin powder solely due to maintenance and parking in July was 319200 tons, a decrease of 350200 tons compared to June. The operating load rate of the PVC powder industry in July was 73.13%, an increase of 3.48 percentage points compared to June. The production of PVC powder in July was 1.902255 million tons, an increase of 142575 million tons compared to June.

The sellable inventory of production enterprises has significantly decreased, and the inventory in the factory area has decreased compared to the end of June

In terms of inventory of production enterprises, the increase in export orders of PVC powder production enterprises was relatively significant in July, and the domestic sales order volume of most enterprises also increased. The overall order receiving situation improved significantly, and the available inventory of sample production enterprises decreased significantly within the month, maintaining a net pre-sale state. Although downstream product enterprises did not show any improvement in construction during the month, with the increase in PVC powder prices during the month, some downstream and traders' enthusiasm for picking up goods has increased, and the inventory of sample production enterprises in the factory area has decreased. According to statistical data, the available inventory of sample PVC resin production enterprises at the end of July was -241500 tons, a decrease of 190600 tons compared to the end of June; The inventory of the sample PVC resin production enterprise in the factory area is 368600 tons, a decrease of 33900 tons compared to the end of June.

The overall social inventory of PVC resin powder accumulated slightly in July

In terms of social inventory, the operating load rate of the PVC resin powder industry in July has increased compared to June. There has been no significant improvement in domestic downstream demand, and some traders have picked up and delivered goods. Overall, social inventory showed a slight accumulation trend in July, and the absolute value of social inventory is still relatively high compared to the same period in previous years. At the end of July, the inventory of PVC resin sample warehouses in East/South China was 425200 tons, an increase of 3100 tons compared to the end of June.

Reduction in single product losses of PVC powder using calcium carbide method in July

In July, the overall price of calcium carbide slightly increased, while the overall cost of PVC resin powder raw materials for calcium carbide method was limited, slightly increasing compared to the end of June. However, the overall factory price of PVC powder showed a gradual upward trend, with a relatively significant increase. Therefore, PVC powder single products of enterprises that purchase calcium carbide have reduced losses during the month. As of July 28th, PVC powder single product losses of enterprises purchasing calcium carbide from outside Shandong region were 258 yuan/ton, a decrease of 366 yuan/ton compared to the end of June. However, PVC resin powder single product losses of enterprises purchasing calcium carbide from outside Inner Mongolia region turned around at the end of the month, and the cost support for PVC powder prices at the bottom of the month weakened.

In summary, the supply level of PVC resin in China has improved in July. Although downstream demand in China has not improved, the improvement in export orders has led to a slight improvement in the overall supply and demand fundamentals of PVC powder. The inventory of production enterprises in the factory area has decreased, and the social inventory has accumulated slightly. However, the overall sales pressure of traders is not high at present; With the increase in PVC powder prices within the month, the cost pressure on PVC resin production enterprises using calcium carbide method has decreased.

It is expected that the supply level of PVC powder in August will slightly increase compared to July

In August, production enterprises usually have a slight decrease in maintenance compared to June July. Currently, there are not many known enterprises planning to undergo maintenance in August, and some early parking enterprises may resume operations within the month. It is expected that the maintenance losses in August will decrease compared to July, and correspondingly, the industry's operating load rate may increase compared to July. It is expected that the PVC powder maintenance loss in August will be between 240000 and 260000 tons, and the operating load rate of the PVC powder industry may be within the range of 74% -75%.

The off-season in the real estate industry usually ends in August, and it is expected that downstream product companies will slightly increase their production in August. There is limited demand or change in domestic PVC resin powder; At the end of July, foreign customers' intention to purchase PVC powder from domestic sources significantly increased, and the export orders received by enterprises improved significantly at the end of July. Currently, this phenomenon will continue in the short term. With the delivery of export orders, the overall demand for PVC powder is expected to improve in August. In terms of cost, the expected fluctuation range of calcium carbide prices in August is limited, and the price center is expected to shift slightly upwards. The raw material cost of PVC resin powder produced by calcium carbide method may increase slightly, but currently, the single product of PVC resin powder in enterprises has significantly reduced losses compared to the previous period, and the cost support effect is relatively limited.

Overall, there is an expectation of incremental growth on the supply side and potential incremental growth on the demand side in August. It is expected that the inventory of PVC resin powder production enterprises in the factory area may be reduced, while social inventory may experience partial accumulation due to partial delivery of goods entering the warehouse.