PVC 2601: Oct 10th Trend & Outlook
PVC Futures Analysis: On October 10th, the PVC2601 contract opened sharply higher in the evening session, reaching a high of 4796 before retreating. The price continued to decline slowly in the morning session, consolidating within a narrow range at a low level in the afternoon, once again breaking below the lower limit.
The PVC2601 contract opened at 4770, reached a high of 4796, and a low of 4725, with a spread of 71. Opening volume increased by 73,610 lots, bringing the total open interest to 1,217,556 lots. The settlement price was 4754, down 1 from yesterday's settlement price of 4755. Daily trading volume was 688,615 lots.
Regional Price Summary: Yuan/ton
PVC Spot Market: The mainstream transaction price in the domestic PVC market saw slight adjustments, but remained weak in the afternoon. Comparing price estimates: high-end prices in North China fell by 20 yuan/ton, while prices in East China remained stable. Prices in South China rose by 20 yuan/ton, while low-end prices in Northeast China fell by 10 yuan/ton, Central China fell by 20 yuan/ton, and high-end prices in Southwest China fell by 50 yuan/ton.
Upstream PVC manufacturers have mostly lowered their ex-factory prices, with some in Northwest China dropping below 4,400 yuan/ton. Some locations in Xinjiang are quoting prices at 4,250 yuan/ton, putting them back within the low range. Futures prices saw a slight increase in the evening session but continued to weaken during the day. Spot prices saw a slight correction in the morning session, before weakening slightly again in the afternoon.
However, after the futures price fell, the bid-ask advantage was relatively clear. Basis spreads for the 01 contract in East China were quoted at -100, -150, -200; in South China at -50, -100; in North China at -320, -380, -430; and in Southwest China at -250, 450, -640. Yesterday, bid-ask activity increased, leading to increased trading volume, but today's spot market remained light.
PVC Market Forecast:
Futures: PVC 2601 futures prices saw a slight rise in the evening session, but the highs were unsustainable, and subsequently weakened. Throughout the day, following yesterday's break below the lower support level, the price broke below the lower support level for the second time today, showing a weakening trend towards the end of the session.
Technically, the three Bollinger Bands (13, 13, and 2) are diverging significantly, with the lower band clearly turning downward, and the middle band also turning downward. The daily KD and MACD lines are showing a clear death cross, indicating a completely bearish closing trend.
Trading volume has also increased significantly over the past few days, with 29.1% of short positions compared to 24.9% of long positions. The market remains dominated by short positions, and we maintain our previous view. In the short term, futures prices will likely test the previous low of 4700.
Spot Market: The current late-day trend of futures prices is likely to test the previous low of the main continuation, with a relatively strong bearish bias, which is also affecting the sentiment in the spot market. Due to a slight surge in the evening session, spot market quotations saw a slight correction at high levels in some areas this morning, but fell back in the afternoon.
Quotations from manufacturers and intermediaries are currently volatile, and trading volume has not seen a significant improvement. Orders are still primarily placed at low points. Furthermore, there is currently no guidance from policies or news, and the golden September and silver October market is no longer in place.
International oil prices fell as a US-brokered agreement to end the Israeli-Hamas war in the Gaza Strip eliminated some of the market's geopolitical premium. Furthermore, a stronger US dollar also weighed on oil prices. Overall, both the spot and commodity markets faced some pressure in the post-holiday period, and spot prices are likely to remain low.
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