Iv. Demand analysis
PVC occupies a VERY important POSITION IN CONSTRUCTION INDUSTRY CONSUMPTION STRUCTURE, ABOUT 60% OF PVC IS USED FOR PRODUCING PROFILE DOORS AND Windows AND SPECIAL PROFILE TO BUILD MATERIALS, WE CAN SAY THAT THE PRICE TREND OF PVC IS CLOSELY RELATED TO OUR COUNTRY REAL ESTATE CYCLE.
PVC piping is usually used for drainage, sewerage and storm drain systems after construction begins. And in the new house sales, indoor decoration involving pipelines, doors and Windows profiles, decorative materials will also use PVC materials.
From the performance of PVC production growth and housing start growth, usually, PVC demand lags behind the real estate cycle 6-12 months.
By the end of November 2022, the accumulative area of new housing construction in China in that year was 11,6320,400 square meters, with a year-on-year growth rate of -38.9%, which was at a low historical level.
Among them, the accumulative value of new housing construction area in the eastern region is 48,655,800 square meters, with a year-on-year growth rate of -37.3%, which is at a historical low level.
The accumulative area of new housing construction in the central region was 30,0773,700 square meters, with a year-on-year growth rate of -34.5%, which was at a historically low level.
The accumulative area of new housing construction in the western region is 286,683,300 square meters, with a year-on-year growth rate of -38.3%, which is at a historical low level.
The cumulative floor space of new housing starts in Northeast China was 4,000,600 square meters, with a year-on-year growth rate of -55.7%, which is at the historical average.
Although the downstream demand for PVC mainly comes from real estate, with the gradual implementation of policies such as underground pipe gallery construction and shantytown reconstruction, orders from infrastructure construction are gradually becoming an important part of PVC downstream, which is complementary to the real estate demand, which weakens the cyclical attribute of PVC downstream.
By the end of November 2022, the growth rate of completed infrastructure fixed assets was 8.9% year on year, a historically high level.
Among them, the fixed assets of the production and supply of electricity and heat, gas and water increased by 19.6% year on year, at a historical high level;
Fixed assets in transport, warehousing and postal services grew at a record high of 7.8 per cent.
The fixed assets of water conservancy, environment and public facilities management grew by 11.6 per cent year on year, at a historically high level.
V. Inventory analysis
Chinese PVC production enterprises are mainly concentrated in the western region, while downstream plastics (8118, 87.00, 1.08%) processing and sales are concentrated in East and South China. Inventory levels in the western region can reflect the production and shipment of upstream manufacturers, while inventory levels in East and South China can reflect whether downstream demand is good and whether dealers are willing to actively purchase.
As of December 30, 2022, the PVC inventory of producers in the upstream western region is 103,000 tons, which is at a historically high level. Downstream East and South China polyvinyl chloride inventory is 255,500 tons, at a historically high level.
Vi. Import and Export
PVC is a chemical product with strong cycle, and its futures price is often affected by supply (output and import quantity) and demand (consumption and export quantity). Sorting out and analyzing the balance sheet of supply and demand is one of the more important work in the study of PVC futures.
As of November 2022, the monthly value of PVC import was 41,700 tons, at the historical average level; The export volume of PVC was 84,500 tons in the month, which was at a historically low level.
Vii. Future market outlook
The PVC market in January 2023, continue to maintain the early point of view, the medium-term should bargain layout, waiting for the fundamental conduction after the landing of the policy. The main reason is that the macro sentiment is optimistic: first, there is still room for real estate policies to increase; second, the deregulation of control and policy stimulus will drive demand to rebound.
Post time: Jan-13-2023