In September, the PVC market experienced a downward trend followed by a rebound, with the average price lowering. Prices of different feedstock saw slightly varying trends, resulting in significant profit margin differences across companies employing different production processes. The following sections provide a detailed analysis based on different production methods.

Profit losses at calcium carbide-based PVC enterprises intensified.

Since September, carbide-based PVC enterprises’ losses have gradually increased. Taking PVC companies in Shandong using externally purchased carbide as an example, as of September 27, the profit margin stood at RMB -757.7/mt, down RMB 326.7/mt compared to the end of August. Due to unplanned output cuts, higher semi-coke prices, and increased downstream stockpiling ahead of the holiday, calcium carbide prices moved up, propping up the cost. In addition, PVC powder prices saw a downward trend in H1 due to soft fundamentals and weak macro atmospheres. In H2, following the implementation of unexpected policy measures such as cuts to reserve requirements, interest rates, and mortgage rates, the macro sentiment improved, driving up futures and spot prices. Despite the rebound, the average monthly price in September was still notably lower than in August.

Profits at PVC producers who imported VCM first fell and then gained.

Up to September 27, the profit at PVC producers who imported VCM was RMB 385/mt, up RMB 161/mt from the end of August. Costs at PVC producers who imported VCM shrank slightly.

Profit losses at outsourced ethylene PVC producers were eased gradually.

Up to September 26, the profit at outsourced ethylene PVC producers was RMB -424/mt, up RMB 43/mt from end-August. The price of ethylene fluctuated downward, dragging down the cost.

Profits at chlor-alkali enterprises shrank constantly.

In Shandong, profits at chlor-alkali enterprises shrank constantly. PVC and caustic soda prices moved down, and only liquid chlorine prices inched up. However, crude salt and calcium carbide prices rose, propping up the cost. Up to September 26, the profit at chlor-alkali producers in Shandong was RMB 374/mt, down RMB 265/mt from end-August.

Short-Term Outlook for PVC Enterprises’ Profit Margins

In the short term, the profit margins for PVC enterprises are expected to improve. The profit margins for carbide-based PVC enterprises have been declining, but integrated profits at chlor-alkali enterprises still maintain profitability close to the two-year average. VCM-based and ethylene-based PVC enterprises are benefiting from falling feedstock prices, leading to improved margins.

Calcium carbide prices are expected to decrease slightly as supply stabilizes and feedstock arrivals at downstream enterprises recover. Ethylene prices may also experience minor declines, while VCM import prices are likely to remain stable. Although PVC fundamentals remain weak, strong macroeconomic expectations could drive prices higher, leading to improved profit margins for PVC enterprises in the short term.