PVC: June supply and demand weak July fundamentals are still difficult to say optimistic

In June, PVC supply and demand both decreased and inventory increased

In June, the PVC market showed a state of both supply and demand decline, the decline of demand side is greater than that of supply side, there is a certain pressure on the delivery of enterprises, pre-sale orders decreased, social inventory increased.

There was a marked drop in output in June.

According to zhuochuang Information statistics show that the PVC powder output in June 2022 was 1,8122,628 tons, reduced by 6.94% compared with May and 6.16% compared with the same period last year. The total output from January to June was 1,299,209 tons, decreased by 2.09 percentage points compared with the same period last year. The decrease of output is mainly due to the increase of maintenance concentration and the decrease of start-up load rate in June. The start-up load rate in June is 76.96%, 3.07 percentage points lower than that in May.

Import estimates for June remain low.

Since this year, the import arbitrage window has been closed, and the import volume has remained low. According to customs data, the cumulative import volume from January to May is 120,300 tons, down 17.77% compared with the same period last year. Imports in June have not heard the general way of trade into China, the import volume is expected to remain between 20,000-30,000 tons.

Domestic demand continued to weaken in June.

The domestic PVC market demand in the second quarter showed weakness beyond expectations, especially in the off-season in June. The terminal product enterprises started work at a low level and showed weak enthusiasm for raw material procurement. According to the evaluation of Zhuochuang Information, the domestic PVC demand in June was 15.21 million tons, a decrease of 13.22% month-on-month and 19.78% year-on-year.

Exports in June are expected to decline month-on-month, but the absolute volume is still high.

From outside dish prices peaked in April, after the international price falls gradually, foreign markets began to weaker demand, domestic prices also fell for the same period, prices fell faster than abroad, so in the second quarter of domestic PVC export arbitrage window open continuously, but the amount of export orders in marginal slip, PVC exports peaked in April, may, exports of marginal slip, From April to June, the export backlog remained at about 200,000 tons. It is expected that the export volume in June will still decrease month-on-month, but the absolute amount will still be above 200,000 tons. Social inventories are rising instead of falling. As the decline in demand was greater than the decline in supply, the social inventory increased instead of decreasing. By the end of the month, the social inventory of sample warehouses in East and South China was 335,500 tons, up 11.54% from the end of June and 131.38% from the same period last year.

Supply and demand may rise slightly in July. Pressure is still high. Supply may rise in July.

As the centralized overhaul of PVC supply end in the second quarter comes to an end, most enterprises have undergone a round of overhaul. At present, it is known that there are only a few enterprises planning maintenance in July, and there are 6 enterprises planning maintenance, involving 1.81 million tons of production capacity. If the maintenance starts in June and is postponed to July, as well as long-term parking enterprises and unplanned maintenance enterprises, the estimated maintenance loss is about 150,000 tons, 109,300 tons less than that in June. The construction load rate is expected to rise to about 80% in July.

 

Improvement in domestic demand in July remains to be seen.

July is a small off-season in a year, and demand improvement is not expected to be strong. With the gradual increase of real estate policies and the marginal improvement of macro data, industry demand may be gradually reflected. On the other hand, with the resumption of domestic work and production, market confidence is restored, steel demand will also gradually improve, but the overall demand improvement still needs to pay attention to.

Net exports may fall month-on-month.

The pattern of imports and exports in July is expected to continue the trend of May-June, with exports continuing to decline month-on-month and imports remaining low. Net exports will fall further. On the whole, PVC supply and demand showed an increasing trend in July, and the increase of supply was more certain. However, it is necessary to pay attention to whether PVC actively reduces production due to losses after the price drops again or the price of caustic soda drops. While the demand side is in the off-season, there is some uncertainty about whether there is a demand to compensate, and the net export volume will further reduce. Therefore, PVC supply and demand fundamentals in July are still unoptimistic.