After the Spring Festival this year, the prices of chemical products collectively went up, but the trend began to diverge in mid-to-late March. Polyolefins entered the adjustment stage, but PVC still maintained a strong trend. Last week, the current prices of PVC futures all hit a 10-year high. Market participants remind investors to view market changes rationally.

Recently, the Ministry of Industry and Information Technology has emphasized that in response to the surge in domestic chemical raw material prices this year, the relevant price increases are mostly short-term and sudden, and the prices of bulk commodities do not have the basis for long-term increases. This round of commodity price increases has an impact on the manufacturing industry, but this impact is generally manageable. In the next step, the Ministry of Industry and Information Technology will work with relevant departments to actively take measures to promote the stabilization of raw material prices.

After the "3P" surge, the trend diverges

In the first quarter, the prices of PVC, PE and PP all rose sharply by 20%, 10% and 9% respectively. A reporter from the Futures Daily interviewed many market participants and learned that the strong price of PVC futures is mainly related to changes in its own supply and demand and the cost side. In the past two years, there has been a mismatch in the launch speed of new capacity of calcium carbide and PVC, and there is a supply gap. In this context, once the calcium carbide industry is affected by environmental protection measures, the price is likely to rise quickly, which will drive the price of PVC on the cost side.

“In recent years, due to the elimination of outdated production capacity due to environmental protection policies, the speed of calcium carbide production has slowed significantly. Baotou, Ordos, Inner Mongolia and other places have introduced corresponding regional policies to reduce power consumption, load reduction, power limit, and increase in energy-intensive enterprises. Refined control measures such as electricity costs. Affected by this, the domestic supply of calcium carbide has been tight, and the price has soared since mid-to-late February, with a cumulative increase of nearly 2,000 yuan/ton in mid-March." Lin Xiaotao, a researcher at the China Plastics Union, told reporters.

Calcium carbide is an important part of the production cost of PVC, and the soaring price of calcium carbide has led to the continuous rise of PVC production costs. According to Lin Xiaotao, when the highest price of calcium carbide in Shandong in the first quarter was 5665 yuan/ton, the corresponding PVC production cost was about 9600 yuan/ton; when the highest price of calcium carbide in the first quarter of Inner Mongolia was 5000 yuan/ton, the corresponding PVC production cost was 8550 yuan/ton. about.

Niu Hui, an analyst at SDIC Anxin Futures, believes that although the price of calcium carbide has fallen from a high level after mid-to-late March, the price of calcium carbide has begun to stabilize and rebound recently. Due to the recovery of downstream demand, the supply of calcium carbide in Inner Mongolia is insufficient, and Ningxia calcium carbide mostly supplies outsourced calcium carbide PVC companies. These factors support the price of calcium carbide, and the cost-side support is currently expected to strengthen.

In addition, the early North American cold current led to the shutdown of about 3.5 million tons of PVC installations, and the tight international supply led to a surge in PVC exports year-on-year. "At present, the export arbitrage window is open. Although the situation in India is severe, the overall export demand is still not bad. From the perspective of internal demand, it is currently in the peak demand season. Higher." Niu Hui said that midstream traders' inventories continued to decline, indicating strong downstream demand. The overall downstream orders are acceptable, and the "May 1st" approach is approaching, and the downstream also has a certain stocking demand.

From the perspective of the domestic market, the pre-holiday petrochemical inventory is strictly controlled, and the pre-holiday inventory is at a low point in recent years. This year, the country advocates on-site Chinese New Year. Some large factories have good orders and continued production, which has increased the start of downstream operations during the Spring Festival. Rate.

However, as the impact of unexpected events subsided and crude oil prices fell, the contradiction between market supply and demand was gradually exposed. Although the accumulated stock of petrochemicals during the Spring Festival this year was significantly lower than in previous years, the destocking of petrochemicals after the holiday was also the slowest in recent years, and the inventory in the intermediate circulation links remained high. The downstream demand was difficult due to high raw material prices and poor cost transmission. Heavy volume.

"From the cost side, with the simultaneous weakening of supply and demand, prices began to fall. However, the trends of the three varieties began to diverge in mid-March. Plastics and polypropylene maintained a simultaneous downward trend, but PVC was exceptionally strong." Niu Hui said.

The current price of PVC reaches a 10-year high

Last week, the price of PVC futures hit a 10-year high. Many market participants thought it was reasonable. Strong fundamentals were the main driving force behind the rise of PVC prices.

Huaan Futures analyst Lu Zheyuan told the Futures Daily reporter that since the beginning of this year, PVC prices have risen one after another, mainly due to the impact of the US cold wave that began at the end of February. The cold wave caused a large number of PVC plants in Texas to shut down due to power problems. As the main international supplier of PVC sources, the United States has been affected by the cold wave and the suspension of production of many PVC factories has supported the price of PVC in the internationally tight PVC market.

"In the second half of last year, the olefin plants in Europe and the United States were not operating normally. In addition to the cold wave in the United States in February this year, the power equipment was interrupted and the chlor-alkali plant was damaged. ) From 1,450 US dollars/ton to 1,800 US dollars/ton. Formosa Plastics’ CFR China price rose from 1,160 yuan/ton to 1,510 yuan/ton, equivalent to RMB 11,000-12,000 yuan/ton.” Lin Xiaotao said, domestic export space opens up , The export volume in the first quarter reached 510,000 tons, exceeding the full-year level of 2019 and approaching the full-year level of 2020.

In fact, PVC exports have increased more than expected. Since August last year, the price gap between the domestic and foreign markets has gradually widened, the export arbitrage window has opened, and the PVC export market situation has improved.

"In 2021, the PVC export market is still relatively optimistic, and the number of export orders has increased significantly. Statistics show that my country's cumulative PVC exports in the first quarter were 509,300 tons, which was significantly higher than the same period in the previous year. Among them, the export volume in March was as high as 229,300 tons. The overseas epidemic situation has improved, and demand for PVC has recovered rapidly, but the recovery of PVC production has not been sufficient, which has led to a significant increase in foreign trade demand, and the role of PVC export market in stimulating consumption has been greatly enhanced." Founder Mid-term Futures analyst Xia Congcong said.

With the accelerated recovery of the global economy and the improvement of the macroeconomic environment, domestic PVC downstream demand has gradually increased. "The proportion of PVC downstream products has not changed much. Pipes/pipe fittings, profiles/doors and windows are in an important position, which is the main driving force for the growth of PVC demand. Pipes/pipe fittings and profiles/doors and windows are mainly used in the construction field. The development of domestic real estate construction affects PVC Demand plays a decisive role." Xia Congcong introduced that the off-season effect of the real estate market weakened in the first quarter, the supply area of commercial residential buildings in key cities continued to grow, and transactions maintained a certain degree of activity. In the first quarter, the national commercial housing sales area and sales amount both hit new highs in the same period in recent years. The market as a whole is improving, and other indicators of the industry have also improved significantly. From the perspective of terminal demand, PVC just needs to maintain a steady upward trend.

In addition, rising costs also support PVC prices to a certain extent. Xia Congcong told a reporter from the Futures Daily that since March, the policy level has increased its influence on the calcium carbide market. The Inner Mongolia Autonomous Region issued the "Guarantee Measures for Ensuring the Completion of the Fourteenth Five-Year Plan for Energy Consumption Dual Control Target Tasks (Draft for Solicitation of Comments)". Under the influence of the energy consumption dual control policy, the operation of calcium carbide plant has further declined, which has exacerbated the tight supply of calcium carbide. "The price of calcium carbide broke last year's high and hit a record high. The operating range of the raw material calcium carbide price has moved up significantly, and the cost of PVC production has continued to increase."

Manufacturers raise prices and have enough confidence to highlight downstream pressure

According to a reporter from the Futures Daily, the price rise and fall of PVC manufacturers followed the price of futures more obviously. Since the first quarter of this year, a discount of ±50 liters has generally followed the price increase of the main futures contract. "The price increase measures reflect that the upstream market for PVC during the year is good, and the seller's market is dominant. On the macro side, with the further improvement of the domestic economy, the prosperity of the upstream manufacturing and processing industry has continued to increase since the first quarter, and the recovery of rigid downstream demand is superimposed on the supply side restriction. Become a manufacturer to raise prices with confidence." Lu Zheyuan said.

According to Yang Xiao, an analyst at the Top Securities Futures, the second quarter is the traditional maintenance season for PVC. At present, some companies have announced maintenance plans. In addition, Ningxia recently announced the "dual control" target, and the problem of tight calcium carbide supply will become more prominent, and it is not ruled out that the possibility of affecting the start of PVC enterprises in the later period is not ruled out. A month-on-month decline in PVC production in the second quarter is a high probability event.

PVC spot prices remain high, leading to a significant increase in downstream production costs, and cost pressures are prominent. "Although the prices of some downstream products have also risen, the increase is not as high as that of the raw materials. The downstream production profits are squeezed and some are at a loss." According to Xia Congcong, an analyst at Founder Mid-term Futures, at present, downstream operations are more cautious, and most of them maintain just-needed purchases. Low and moderate replenishment is the main focus, and the enthusiasm for chasing the rise is not high, and some companies are resistant to high-priced sources. Although mainstream prices in the PVC market have risen, the pace of actual spot transactions has slowed down.

Gu Xiaowen, a PVC researcher at Zhejiang Mingri Holding Group Co., Ltd., also confirmed to a reporter from the Futures Daily that in the face of the sharp rise in upstream raw materials, PVC downstream has resisted from the beginning to gradually accepted, and the price acceptance has gradually increased, but the raw material inventory has always been maintained at a low level. , The downstream basically maintained the pace of callback procurement and high-level wait-and-see.

Will short-term diving change the long-term trend?

Yesterday, PVC futures prices showed a high adjustment trend. According to interviewees, the decline of PVC prices is a short-term adjustment of the market, and the downward space is expected to be limited. In Xia Congcong's view, in 2021, the PVC market is different from the past. The cost side will rise more obviously, and the scale of new capacity release will also be subject to certain restrictions. At the same time, the strengthening of foreign markets will give a positive boost to domestic PVC. For investors, new changes in the market should be viewed rationally.

"PVC disks have seen a significant rise and fall. We believe that it is mainly due to the rapid deterioration of the epidemic in India. Since India is the world's largest PVC importer, the rapid deterioration of its domestic epidemic may cause its demand to collapse. This is the external PVC The price casts a shadow." Yang Xiao believes that an important factor for the current high PVC price is the large amount of exports brought about by the high external price. However, at present, due to the rapid deterioration of the epidemic situation in India, the possibility of a decrease in domestic exports caused by a decline in external prices will not be ruled out in the later period.

"The contradictions in the PVC market are not prominent. Under the support of cost, export orders and low inventory, the futures price will maintain a high operating trend. Although the market will decline in the short term, the adjustment space is expected to be limited. It is not ruled out that the futures price will break upwards further." Xia Congcong said. Need to focus on equipment maintenance, export market trends, pre-holiday stocking in downstream markets, and policy impacts.

In Lu Zheyuan's view, high commodity prices are greatly affected by short-term sentiment. Recently, the overseas macroeconomic situation has not stabilized. PVC prices have fallen to a certain extent, but the price turning point may not rise or fall for a while. The short-term diving of PVC will hardly change the long-term trend. "In the plastic 3P, PVC is clearly in the leading position this year. In the future, PVC is still the first choice for downstream chemicals."

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