Introduction
In 2022, the PVC powder market in China will face dual pressures from both macro and micro perspectives, showing the main characteristics of reduced profits, lower prices, weak domestic demand and high social inventory. Although the new capacity is limited, the output is reduced, and the export continues to record high, the support for the market is limited, and the PVC powder is still in a stage of oversupply, and the market is operating under pressure. In the coming 2023, the pressure on supply and demand is still a relatively obvious feature, but the macro expectation is good. It is expected that the macro expectation of PVC powder in 2023 will continue to play games with the real fundamentals, and the price center of PVC powder will gradually rise.
After the rapid development in recent years, the PVC powder industry is in a state of full competition, the concentration of production capacity is increasing, the product technology is mature, and the market is stable. From the perspective of product life cycle, the PVC powder industry is in an obvious mature period. Under the condition of full competition in the industry, the operation of the PVC powder industry is mainly determined by its supply and demand fundamentals. However, as a futures product, PVC powder has certain financial attributes, so the macro aspect will also have a significant impact on the operation of the industry.
Looking back to 2022, the macro expectation and micro fundamentals have become the main logic of market operation. The PVC powder market in 2022 also shows several characteristics different from previous years. The following will analyze the PVC powder market in 2022 in combination with specific data.
Profit of PVC powder industry declined
In 2022, the profit of PVC powder production enterprises decreased significantly compared with that in 2021, especially in the second half of the year, when the average profit of the enterprises purchasing calcium carbide in Inner Mongolia was 25 yuan/ton, down 96% from last year. The average profit of the enterprises purchasing calcium carbide in Shandong was - 404 yuan/ton, down 218.48% from last year. The significant decline in PVC powder profit level in 2022 was mainly affected by the overall decline in PVC powder price. While the price center of PVC powder dropped significantly, the overall decline in the price of raw calcium carbide was relatively small, significantly reducing the profit of PVC powder enterprises.
The price center of PVC powder dropped
The price center of PVC powder will move down in 2022. In the long term, from the second half of 2022, the price will gradually be lower than the lowest value in the history of five years, mainly because the pressure of the macro environment and fundamentals faced by PVC powder this year is significantly higher than that of previous years. From the specific operation of PVC powder in 2022, the average price of SG-5 in 2022 was 7546 yuan/ton, down 18.25% from 2021. The driving factors affecting the operation of the PVC powder industry in 2022: on the one hand, the Federal Reserve entered the interest rate increase cycle in 2022, the risk aversion sentiment of funds increased, and the domestic real estate entered the downward adjustment stage, the overall performance of the macro environment was poor, which was negative for commodities; On the other hand, the supply and demand side of PVC powder itself was relatively weak in 2022. The total demand reduction of PVC powder in 2022 was significantly greater than that of the supply side, and the PVC powder was in a stage of oversupply. The ending inventory was significantly increased, with an increase of 206.67% compared with 2021.
Both supply and demand of PVC powder have declined significantly
The total supply of PVC powder in 2022 was 22644800 tons, down 0.91% from 2021. The decrease in total supply is mainly due to the decrease in domestic PVC powder production compared with 2021. The production of PVC powder in 2022 was 21984800 tons, a decrease of 0.82% compared with 2021. In 2022, the output will decline, on the one hand, because of the limited capacity increment, the new capacity is only 250000 tons; On the other hand, due to the poor profitability of the industry and other factors, the operating load rate of the industry's stock capacity has declined. The total demand for PVC powder in 2022 is expected to be 21.7248 million tons, 3.67% lower than that in 2021. Although the export of domestic PVC powder reached a record high in 2022, supporting the demand to a certain extent, the domestic demand declined significantly, so the total domestic demand for PVC powder in 2022 still showed a downward trend. The decline in domestic demand in 2022 is mainly due to the fact that the real estate industry has entered a downward stage, and the demand end of PVC powder is closely related to real estate, so the domestic demand of PVC powder will weaken in 2022.
In 2022, the supply and demand of PVC powder decreased compared with that of last year, but the demand reduction was more obvious. Therefore, the supply of PVC powder in 2022 was more than the demand, and the social inventory was significantly increased compared with that of previous years. With high inventory, the PVC powder market is operating under pressure, especially since the second half of the year, the price of PVC powder is fluctuating and falling.
The social inventory of PVC powder remains high
In 2022, the inventory of PVC powder in East China/East China warehouses remained high, significantly increasing compared with previous years. As of December 30, the total inventory of sample warehouses in East China and South China was 239600 tons, an increase of 88.07% year on year. The change of PVC powder inventory in 2022 showed an anti-season feature. Although the inventory accumulated seasonally in the first quarter, the inventory in the second and third quarters did not gradually decrease as in previous years, and even gradually increased in the second quarter. The inventory in the third quarter remained high, which was significantly higher than that in the same period of previous years. Although it decreased in the fourth quarter, it was mainly due to the poor logistics and transportation in local areas, the decrease of market arrival and the appropriate replenishment of the terminal. PVC powder itself is a product separated from production and sales. The change of warehouse inventory in East China/South China reflects the result of the game between supply and demand of PVC powder to a certain extent. From this, it can also be seen that the supply of PVC powder in the second half of 2022 is more than demand, and the spot market is facing greater supply pressure.
Outlook 2023: Expectation and reality continue to play the game of price center or low before high after high
In the first half of 2023, the PVC powder market is still constrained by weak reality. The output of 1.2 million tons of units commissioned at the end of 2022 will be concentrated in 2023, and there are still 1 million tons of units planned to be put into operation in the first half of 2023, but the demand for PVC powder in the first half will still be in the recovery stage. As a cyclical commodity, the price of PVC powder is affected by the macro aspect, and the expected aspect is gradually improving. Under the guidance of the expected improvement, the price of PVC powder in the first half of 2023 should not be too pessimistic.
In the second half of the year, when the real estate and consumption are gradually restored to a "healthy" state, the demand side may face a certain improvement. The supply and demand fundamentals of PVC powder may be marginally improved, while the macro side may still have a positive support. In general, the performance in 2023 may be weak first and then strong, and the performance of PVC powder price is expected to be better than that in 2022.
