PVC Price Drop Analysis
PVC Futures Analysis: On November 18th, the PVC2601 contract opened higher but closed lower in the night session, continuing its downward trend. The morning session maintained this trend, continuing the downward oscillation, with prices falling further in the afternoon.
PVC2601 contract opening price: 4600, highest price: 4606, lowest price: 4515, price difference: 91, increase in open interest: 107,190 lots, total open interest: 1,462,731 lots, settlement price: 4552, previous settlement price: 4587, down 35, daily trading volume: 904,897 lots. Evaporated funds: 4.628 billion yuan, fund inflow: 262 million yuan.
Regional Price Overview: Yuan/ton
PVC Spot Market: Domestic PVC market mainstream transaction prices fell to low levels, with a weak market sentiment. Price comparisons show that prices fell by 30-40 yuan/ton in North China, 30 yuan/ton in East China, 30-40 yuan/ton in South China, 30 yuan/ton in Northeast China, 30-50 yuan/ton in Central China, and 20-40 yuan/ton in Southwest China.
Upstream PVC producers maintained stable ex-factory prices in some areas, while others began to slightly lower them by 20-30 yuan/ton. Although some producers did not adjust their prices, given the current weak market conditions, they are expected to follow suit in the near future. Futures prices continued to weaken, and the spot market lacked confidence in offering prices.
Fixed prices were lowered, and basis adjustments were minimal. Specifically, the basis for the January contract in East China was -(30, -80), in South China it was -(0, -40 or +20), in North China it was -(350, -370, -380), and in Southwest China, some sources had a single January contract at -(190, -320). Although both futures and spot prices declined, the spot market remained primarily driven by immediate demand. However, compared to the previous period, restocking transactions for immediate needs improved slightly within the low price range.
PVC Market Outlook:
Futures Market: The PVC2601 futures contract saw a continuous decline on Tuesday, with a significant increase in open interest of 107,190 lots, indicating increased market activity. In terms of trading volume, long positions accounted for 25.2% compared to short positions for 30.1%, suggesting a significant short-selling activity.
The price decline altered the technical chart, with the Bollinger Bands (13, 13, 2) widening from narrowing to a downward trend. The daily KD lines crossed, and the MACD line showed a bearish crossover. The cultural commodities index also declined throughout the day.
Today's price decline broke the recent low-level consolidation, effectively ending any hope of a small rebound and pushing prices into a lower range. In the short term, the 4500 level will be a key support level to watch.
In the spot market: Firstly, looking at overall commodity sentiment, at the midday close, coking coal fell nearly 4%, while container shipping indices (European route), coke, Shanghai silver, and double-sided coated paper fell over 2%.
Excluding a few specific products, most chemical products were in a downward trend, and PVC futures and spot markets were not spared. Tuesday's sharp decline pushed spot prices to new lows, essentially extinguishing any expectations of a small rebound from the recent sideways movement. Market sentiment is increasingly depressed.
Given the supply and demand conditions in the fourth quarter of winter, supply will remain ample, while weakening demand will further exacerbate the supply-demand imbalance. The weak fundamentals, coupled with the unfavorable overall commodity environment, have put significant pressure on the spot market. Overall, spot prices may face further downward pressure in the short term.
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