Illustrated PVC: continue to move the center of gravity

During the long holidays of the Spring Festival, the international financial market was generally stable, the Dow Jones Industrial Index was not volatile, crude oil prices fell slightly, the dollar weakened, and international commodity prices generally rose. The first trading day after the holiday ended up widespread domestic goods, PVC futures also ushered in the opener, V1205 contract eventually closed at 7045 yuan / ton, compared with last trading day before the settlement price rose 25 yuan / ton, intraday ascribed to 7125 / t, the highest price since October 14 last year. Market transactions were relatively active, with a total turnover of 82,000 contracts and an increase of 18,000 hands to 78,000 contracts.

Contract spread
From the perspective of spread structure, far-month contracts still maintain a higher premium. The post-holiday spot market has not yet fully recovered, and the transaction is extremely light. In the Eastern China, the price of the calcium carbide method five-type material has been quoted at around 6,650 yuan/ton, and the ethylene method PVC has been delivered at around 7,000 yuan/ton. In the short term, the spread between the main contract of the futures market V1205 and the spot price is too large. In the absence of the spot market support, the price rise is difficult to sustain; the spread between the far month V1209 contract and the main V1205 contract is 290 yuan/ Around the ton, tends to be stable.

Calcium carbide market
During the long holidays, the drop in PVC utilization rate led to a phased oversupply in the calcium carbide market, and the price of each production area was reduced by RMB 50-150/ton. At present, the average price of calcium carbide in the Southwest is about RMB 3,925/ton, the average price of calcium carbide in the Northwest China is about RMB 3,375/ton, the average price of calcium carbide in North China is about RMB 3,725/ton, and the average price of calcium carbide in East China is about RMB 3,875/ton. It is expected that with the increase in the operating rate of PVC in the later period, the pressure of excess supply of calcium carbide will gradually ease, and the space for PVC production costs will fall.

Monomer market
The strong upstream ethylene prices provided support for the prices of ethylene dichloride (EDC) and vinyl chloride monomer (VCM). During the long holidays, the EDC price trend in the international market was stable. FOB prices in Northwest Europe rose slightly to US$310/ton, Far East CFR prices to US$305/ton, Southeast Asia CFR prices to US$310/ton, and US Gulf FOB prices to US$275/ton. Vinyl chloride (VCM) monomer is relatively strongly affected by the ethylene supply of PVC. The Far East CFR price is reported at US$810/ton; the Southeast Asia CFR price is reported at US$843/ton; the US Gulf FOB price is reported at US$725/ton. Nordic FOB prices are reported at $695/t.

After the operation proposal, the main contract of domestic PVC futures was traded above 7,000 yuan/ton, and the price decline showed that in the absence of effective support from the spot market, it was difficult to accelerate the rate of shift in the focus of the trading, and it was temporarily not suitable for higher prices. The oversupply situation in the calcium carbide market will be eased with the increase in the operating rate of PVC production enterprises. The price of monomer in the international market will also be boosted by the upstream price of ethylene. In the medium and long term, the conditions for the slower shift in the focus of PVC prices still exist. Operationally, it is recommended that investors try to establish more than one spot on a dip, and it should not be higher than 7,000 yuan/ton.