August 27th PVC 2601 Market Analysis
PVC Futures Analysis: On August 27th, the PVC 2601 contract saw mainly narrow price fluctuations in the evening session, with a narrow price range. This trend remained unchanged after the morning session, with a noticeable decline in the afternoon price.
The V2601 contract opened at 4995, reached a high of 5031, and a low of 4945, with a spread of 86. Opening prices increased by 52,557 lots, with open interest reaching 1,109,875 lots. The settlement price was 4990, compared to yesterday's settlement price of 5026, a decrease of 36. Daily trading volume was 744,393 lots, with deposits of 3.845 billion yuan and inflows of 145 million yuan.
Regional Price Summary: Yuan/ton
PVC Spot Market: The mainstream transaction price in the domestic PVC market declined, and market sentiment weakened. Comparing price estimates, prices fell by 20-30 yuan/ton in North China, 50 yuan/ton in East China, 10-20 yuan/ton in South China, 20-30 yuan/ton in Northeast China, 20 yuan/ton in Central China, and 30 yuan/ton in Southwest China.
Ex-factory prices at upstream PVC manufacturers remained largely stable, with no significant adjustments observed. Upstream companies are generally adopting a wait-and-see approach. Futures prices weakened and fell, leading to a decline in spot market bids. However, the downward trend in futures prices led to a significant basis advantage in spot quotes, with slight adjustments.
Basis bids for the 01 contract in East China ranged from 160-220-260, in South China from 150-230, in North China from 420-470-520, and in Southwest China from 510-650 for some sources. High bids in the spot market make it difficult to execute. Given the advantage of spot pricing, downstream buyers tend to place orders at lower prices, but even then, this is mainly driven by immediate demand.
PVC Market Forecast:
Futures: The PVC 2601 contract futures price fell significantly in the afternoon, closing at a low level at the end of the day. There was a large increase in short positions, with 29.1% of short positions compared to 22.2% of long positions.
As of now, the open interest of the 2601 contract has reached 1,109,875 lots. Technically, the daily Bollinger Bands (13, 13, and 2) are trending downward, and the KD line is beginning to form a death cross. Overall commodity prices are weak. At the midday close, most of the main domestic futures contracts were in the red, with polysilicon down over 4% and coking coal and crude oil down over 3%. With the current low price at the end of the day, the price may test the lower band in the short term, observing support at 4910.
Spot market sentiment is generally negative today, with most products declining. PVC futures prices also fell in the afternoon, weakening market sentiment. In the corresponding spot market, favorable spot prices may encourage inquiries and restocking, but a trend is unlikely to emerge.
Downstream suppliers are filling inventories with small orders at low prices. From a supply and demand perspective, with the completion of chlor-alkali plant maintenance, supply continues to increase slightly. Domestic demand remains at previous levels, while export offers from individual merchants and manufacturers have been relatively positive.
International crude oil futures prices retreated from a near three-week high, ending a four-day upward trend, as investors monitor developments regarding US tariffs, the war in Ukraine, and potential disruptions to Russian oil supply. Overall, spot market prices are expected to remain range-bound at low levels.
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