I, market review
PVC(6402, 10.00, 0.16%) main contract in December 30 closed at 6263 yuan/ton, a month up 312 yuan/ton (5.24%).
Looking back at the whole December, in the first half of the month, the main contracts showed an upward trend thanks to the deregulation of the epidemic policy and the loosening of the real estate policy. In the second half of the month, with the re-impact of the epidemic and the sluggish demand at the end of the year, the supply and demand level failed to give a positive feedback, and the market gradually entered the shock consolidation. Near the end of the year, the holiday effect further emerged, showing an overall upward trend.
II, spot analysis
PVC production process has two kinds: calcium carbide method and ethylene method, ethylene method of PVC quality pure and uniform, the price is slightly higher than calcium carbide PVC method. The delivery variety of PVC futures in our country is SG5 grade 1 conforming to the national standard. There are no clear restrictions on whether the delivery product is made by the calcium carbide process or the vinyl process.
As of December 30, 2022, spot price and spread of PVC are shown below:
On that day, the average spot price of vinyl PVC in China was 6,313 yuan/ton, up 165 yuan/ton compared with the end of last month.
On the same day, the average spot price of domestic calcium carbide PVC is 6,138 yuan/ton, compared with the end of last month, up 198 yuan/ton.
The price difference between ethylene method and calcium carbide method on that day was 175 yuan/ton, compared with the end of last month, up 33 yuan/ton, the price difference is still at a historical low level
As of December 30, 2022, the PVC futures spot price spread is -66 yuan/ton, 3 yuan/ton lower than the previous day, which is at a low level in history.
III. Supply analysis
For a long time, the Chinese PVC market has been a development pattern coexisting with two kinds of technology lines, calcium carbide method and ethylene method, but due to the characteristics of “rich coal, poor oil and less gas” resources in our country, calcium carbide method PVC has become the leading technology in our country, but in the international market, the mainstream PVC products are made by the ethylene method, and ethylene is produced by energy cracking such as oil and gas. So the price of PVC and international oil prices show a relatively strong correlation.
The process route of vinyl PVC is as follows: crude oil — naphtha — ethylene — dichloroethane (EDC) — vinyl chloride (VCM) — polyvinyl chloride (PVC)
Calcium carbide process is widely used in Chinese chlor-alkali production enterprises to produce PVC, and the output of PVC by calcium carbide process accounts for about 80% of the total output in China.
The production process of calcium carbide polyvinyl chloride is: Coal – calcium carbide – acetylene – vinyl chloride (VCM) – polyvinyl chloride (PVC) electric reduction method is the mainstream method of industrial production of calcium carbide at present, this method takes coke (2798, 29.50, 1.07%) and lime as raw materials, according to a fixed ratio of mixed into the closed calcium carbide furnace, Calcium carbide is produced by electric heating to 2000-2200 degrees. As this method needs to consume a large amount of electric energy, the electricity cost accounts for a high proportion of the total cost for the polyvinyl chloride production enterprises using calcium carbide method.
To sum up, the futures price of PVC is affected by thermal coal (0, -921.00, -100.00%) (electricity price), coke and calcium carbide prices at the same time, showing a high correlation.
By January 03, 2023, Chinese power coal futures price is 921 yuan/ton, compared with the previous day, no change; Coke delivery price is 2,610 yuan/ton, compared with the previous day, down 95 yuan/ton.
As of December 30, 2022, the average spot price of calcium carbide in mainstream calcium carbide factories in Northwest China is 3,910 yuan/ton, which has no change compared with the previous day. The spot price of calcium carbide in the country is 4,101 yuan/ton, compared with the previous day, no change.
When chlor-alkali enterprises produce liquid chlorine, they also get caustic soda, an associated product. In recent years, the price of caustic soda and liquid chlorine form a seesaw effect, that is, when the price of caustic soda is high, the price of liquid chlorine is relatively low, and vice versa, which makes the profit of chlor-alkali enterprises maintain at a reasonable level. Liquid chlorine is difficult to store and transported over long distances, so manufacturers tend to synthesize PVC and use up excess liquid chlorine stocks.
The downstream of caustic soda mainly includes alumina, paper making, printing and dyeing and chemical industries. The warming of the downstream of caustic soda will drive the increase of caustic soda production of chlor-alkali enterprises, and the associated product liquid chlorine will be made into PVC, thus passively increasing the market supply of PVC, which will press the market price of PVC to a certain extent. In general, PVC prices tend to remain high when caustic soda prices are low.
As of December 30, 2022, the spot price of ionic membrane caustic soda is 1,344 yuan/ton, compared with the previous day, there is no change, and the current price is at a historical high position.
At present, the main demand for caustic soda in China comes from the alumina production link, so the price of caustic soda and the price of alumina show a high correlation.
Domestic electrolytic aluminum is widely used in real estate, automobile and electric power industries. The recovery of these downstream industries will increase the demand for aluminum products, which will be transmitted to the upstream, pushing up the caustic soda price and indirectly affecting the price trend of PVC futures.
As of December 30, 2022, the spot price of domestic alumina is 2,965 yuan/ton, no change compared with the previous day, and the current price is at the historical average position.
Post time: Jan-13-2023