Introduction: In Q3,
2024, China’s PVC paste prices first remained stable and then saw a downward
trend, with a slight rebound at the end of the quarter. On the supply side,
some PVC paste producers underwent concentrated maintenance, resulting in a
noticeable drop in the industrial operating rate. However, demand during July
and August remained weak due to the off-season, and the improvement in
September was limited, resulting in overall sluggish demand. For Q4,
supply-side pressure is expected to persist, and the extent of demand recovery
remains uncertain. The average price of PVC paste may move down further.
In Q3,
China’s PVC paste prices first remained stable and then saw a downward trend, with
a slight rebound at the end of the quarter. The average price in Q3 dropped
compared with Q2. As of September 27, mainstream dealing prices of general
material in East China hovered at RMB 7,150-7,850/mt, with an average quarterly
price of RMB 7,771/mt, down 0.55% from Q2 and 4.87% YoY. The highest price was
RMB 8,125/mt in early-July, and the lowest one was RMB 7,350/mt in
end-September. In North China, glove material prices hovered at RMB
7,500-7,800/mt, with an average price of RMB 7,885/mt, down 0.30% from Q2 and
2.79% YoY. The highest price was RMB 8,125/mt in early-July, and the lowest one
was RMB 7,600/mt in end-September.
Although
PVC paste producers concentrated their maintenance in July and August, leading
to a reduction in industry operating rates, demand remained weak. Downstream
product manufacturers faced poor orders, and the combination of high
temperatures and heavy rains in southern China further affected operations,
reducing their enthusiasm for purchasing feedstock. In H1 September, the
expected peak demand season in the domestic market did not materialize, and
export orders from downstream industries underperformed. Due to India’s
anti-dumping measures, exports to the country were nearly halted, and China’s
PVC paste producers faced sales pressure. General-purpose PVC paste prices
continued to decline, while glove-grade demand remained stable, resulting in
little price movement. In late September, as downstream industries began
restocking ahead of the National Day holiday, with no significant inventory
pressure on the supply side, and macroeconomic policies including interest rate
cuts, loan rate reductions, and various innovative support tools announced by
the State Council Information Office, market sentiment was boosted. PVC paste
prices rebounded slightly, and market transactions improved.
In Q3,
Some PVC paste producers concentrated their maintenance activities, resulting
in a decline in industry operating rates.
As of
September 26, the operating load for the PVC paste industry stood at 68.60%, a
5.63 percentage point drop compared to Q2. The ethylene-based PVC paste
industrial operating rate was 54.86%, up 0.97 percentage points QoQ. From July
to August, PVC paste units underwent intensive unit maintenance, propping up
the output loss. In September, with the unit restart, the PVC paste output rose
gradually. PVC paste output in Q3 was around 284.4kt, down 6.14% QoQ. Though
most PVC paste producers faced no inventory pressure, they faced sales pressure
due to soft demand. Thus, PVC paste prices saw a downward trend.
In Q3,
glove-grade demand was passable, and general-purpose demand was average.
In Q3, the
operating levels of downstream PVC glove manufacturers remained relatively
stable, with 460-500 production lines in operation. In July and August,
glove-grade downstream enterprises mainly purchased on a need-to basis. In
September, export orders for glove products saw a price decline, leading to
reduced operations at some small and medium-sized glove manufacturers, while
large manufacturers slightly increased their production lines. PVC glove
exports in July and August amounted to 8.416 billion pairs, representing a
30.65% YoY increase.
For
general-purpose PVC, downstream demand in Q3 was tepid. July and August, being
traditionally low-demand months, saw weak orders and operations in industries
like leather and foam materials. High temperatures and heavy rainfall in the
southern region further weakened production activity. Procurement of feedstock
was mainly limited to essential needs. Despite September being the start of the
traditional high-demand season, orders in some downstream sectors showed no
improvement. The coated fabric industry was driven by short-term orders, with
no long-term export orders placed. The toy industry experienced mixed demand
and operations, while other general-purpose PVC sectors showed mediocre demand
overall. In the first half of September, demand remained weak. However, by the
second half, restocking ahead of the National Day holiday led to a short-term
improvement in demand as downstream manufacturers entered the market for bulk
purchases.
Exports
decreased weighed on domestic sales pressure.
Due to the
preliminary anti-dumping ruling issued by India’s Ministry of Commerce and
Industry on April 26, 2024, targeting PVC paste resin from mainland China,
Korea, Malaysia, Norway, Thailand, and Taiwan, exports to India began to
decline significantly from May and June, with nearly no shipments in July and
August. China’s PVC paste exports in July and August 2024 totaled 15.7kt, a
41.96% YoY decrease. With weak export demand, China’s PVC paste manufacturers
continue to face pressure in the domestic market.
In Q4, the
primary drivers of domestic PVC paste prices will be supply-demand
fundamentals. Supply is expected to remain high, while demand may offer limited
bright spots, potentially leading to weak price fluctuations.
Supply: As colder
weather approaches, most companies will not schedule planned maintenance,
except for those already in long-term shutdown. Most PVC paste producers may
hold operating rates high. Before the National Day holiday, sales at most
producers were decent. Thus, in October, PVC paste producers hold fairish
sentiments amid low inventory pressure. However, supply-side pressure may
gradually increase in November and December as operating rates may increase.
Demand: Prices of
China’s domestic glove products remain low. Most production lines are operated
by large manufacturers. There is little expectation of significant changes in
the number of production lines in Q4. Downstream companies are likely to engage
in bargain-hunting, with demand for high-priced grades remaining average.
General-purpose PVC demand in downstream sectors will depend on export orders,
and if export demand improves, it could boost general-purpose PVC demand.
However, if there is no improvement in export orders, demand is expected to
remain flat. In terms of exports, colder winter weather in certain European
countries may slow down production, leading to expectations of reduced
shipments to Europe.
Feedstock: Q4 calcium
carbide prices are expected to rise slightly compared to Q3. In October, after
the National Day holiday, there may be a surge in downstream deliveries, but
procurement enthusiasm may decrease compared to September. Calcium carbide
supply may improve as maintenance and production stability at carbide furnaces
return to normal. Calcium carbide prices may move down amid higher sales
pressure. However, semi-coke prices will possibly inch up, giving stronger cost
support. Thus, the price drop rate may be limited. In November, calcium carbide
prices may hover at lows, with the possibility of increases if the PVC market
improves. By December, colder weather may affect carbide furnace stability,
leading to reduced production and potentially higher prices.
In Q4, the
PVC paste industrial operating rate may remain high, leading to ample supply, while
downstream demand will depend on changes in orders. Macro-level factors will
also need to be monitored, as they could influence price trends. Although some
upward price adjustments might occur in early October, prices are expected to
decline later in the quarter as supply pressure builds. Overall, PVC paste
prices are likely to hover at lows in Q4.