China PVC Prices Extend Decline, Near-Term Market Seen Range-Bound

China’s PVC market continued to weaken last week, with futures prices remaining under pressure while spot prices moved within a relatively narrow range. Mainstream SG-5 spot prices stayed at low levels. Overall, PVC prices declined 1.71% over the week.

Futures and Spot Prices Remain Weak

The main PVC 2701 futures contract opened the week at RMB 4,673/ton and declined to around RMB 4,515/ton by the weekend. Trading remained characterized by a strong struggle between long and short positions, while the overall price range shifted slightly lower.

In the spot market, mainstream SG-5 prices in East China stood at RMB 4,420-4,500/ton toward the end of the week. Spot prices showed much less volatility than futures. Traders continued to sell at prevailing market levels, while downstream buyers made limited purchases at lower prices and showed little interest in building significant inventories.

Supply Remains Moderate but Pressure Could Increase

Some PVC facilities remained under maintenance last week, while plants that had previously been shut were preparing for gradual restarts. The overall operating rate remained above 70%.

As August comes to an end, maintenance activity is expected to decline, raising the possibility of higher operating rates and increased supply pressure in the market.

For the calcium carbide route, losses encouraged several producers to reduce operating loads voluntarily or carry out maintenance. Despite this, operating rates remained above 70%. Power supply disruptions in Northwest China indirectly affected calcium carbide availability. Calcium carbide prices remained stable, while producers continued to face losses.

For the ethylene route, international crude oil price fluctuations caused changes in ethylene feedstock costs. Geopolitical developments and changing expectations surrounding the US-Iran situation contributed to oil market volatility. Ethylene-based PVC producers also remained in loss-making territory, with plant operating rates adjusted according to maintenance schedules.

Downstream Demand Remains Weak

The market remains near the end of the traditional off-season, with downstream operating rates generally low and significant differences between sectors.

Pipes: Operating rates remained around 30%, pressured by weak new real estate construction starts. With orders insufficient, manufacturers mainly purchased raw materials according to immediate requirements and kept inventories low.

Profiles: Operating rates were somewhat better, approaching 40%. Some demand came from renovation and urban renewal projects, although additional growth remained limited.

Exports: Overseas demand remained weak. Trade barriers in some regions further affected export activity, with export orders showing no significant month-on-month improvement and failing to provide meaningful support to the market.

Overall, downstream participants continued to take a wait-and-see approach, with no substantial active restocking. A genuine improvement in demand will need to be confirmed during the traditional September peak season.

PVC Inventories Continue to Decline Slowly

PVC inventories continued to decrease last week, although the pace of destocking remained limited. Total inventory levels are still high, meaning supply pressure has not been fundamentally resolved.

Upstream factory inventories recorded a slight decline, but social inventories remained difficult to clear, adding downward pressure to prices. The limited inventory reduction was mainly attributed to upstream maintenance and production cuts rather than stronger downstream purchasing.

Calcium Carbide Provides Limited Cost Support

Calcium carbide prices in major producing regions remained broadly stable. Power supply conditions at power plants remained an important factor and helped establish a floor for PVC prices, but they did not provide enough support to push the market higher.

Calcium carbide prices increased only 0.40% last week, reaching a cyclical high.

PVC Market Expected to Trade Within a Narrow Range

PVC prices are expected to remain within a relatively narrow range in the short term. The underlying supply-demand balance remains firmly established, making a strong directional move unlikely.

On the downside, continued losses among PVC producers have encouraged production reductions, providing support and limiting further price declines. However, high inventory levels and weak downstream demand continue to prevent the market from moving higher.

Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.