PVC : Price Rally & Outlook (January 26)
PVC Futures Analysis: On January 26th, the PVC2605 contract price traded sideways at high levels during the night session, with a slight increase. The price maintained a relatively good upward trend in the morning session, closing at a high level in the afternoon, with prices rising throughout the day.
PVC2605 contract opening price: 4921, highest price: 4984, lowest price: 4896, price difference: 88, increase in open interest: 25832 lots, total open interest: 1095101 lots, settlement price: 4938, previous settlement price: 4875, up 63, daily trading volume: 1323485 lots. Evaporated funds: 3.801 billion yuan, fund inflow: 118 million yuan.
Regional Comprehensive Price Overview: Yuan/ton
PVC Spot Market: Domestic PVC market mainstream transaction prices continued to rise at high levels, showing a positive trend. Price comparisons show that prices rose by 40 yuan/ton in North China, 60-80 yuan/ton in East China, 50-80 yuan/ton in South China, 10 yuan/ton in Northeast China, 20-30 yuan/ton in Central China, and 20-70 yuan/ton in Southwest China. Upstream PVC producers maintained stable ex-factory prices in some areas, while others raised them by 20-50 yuan/ton. First-generation contracts were mostly based on basic volumes.
Futures prices remained high, with a slight further breakthrough of the high point. Spot market offers were active across regions, but some traders with limited stock withheld quotes. Compared to last Friday, prices continued to rise. Although spot and fixed-price quotes coexisted after the futures price increase, the enthusiasm for transactions and inquiries decreased. Specifically, basis offers for the May contract in East China were -(250, -270), in South China -(200, -250), and in North China (450, -500). In Southwest China, some May 2023 contracts traded at -300 to -620. Price increases suppressed downstream demand, resulting in sluggish trading at the beginning of the week.
PVC Market Outlook:
Futures: The PVC2605 futures contract continued its upward trend, reaching a high of 4984 at the close on Monday, approaching the upper resistance level. Technically, the Bollinger Bands (13, 13, 2) are flattening, and the daily KD and MACD lines are showing a golden cross trend. The price is significantly higher than the MA lines. Monday saw increased open interest and capital inflows, with long positions accounting for 25.5% compared to short positions for 24.7%.
This increase in open interest suggests a slight bullish sentiment, and the strong technical close may support further minor price increases. In the short term, the stability of the 4950-5000 range should be monitored, along with the performance of the 5000 resistance level. While a slight upward trend is expected, the risks may increase.
In the spot market: Cultural commodities also traded at high levels on Monday, breaking through previous highs. By midday, domestic futures contracts mostly rose, with Shanghai silver up nearly 13%, platinum up over 9%, palladium up over 7%, fuel oil up nearly 7%, European shipping up over 5%, LPG, rapeseed oil, and SC crude oil up over 4%, and Shanghai gold up nearly 4%.
Although it is currently the off-season, especially given the consensus that the fundamentals of PVC are relatively weak, both spot and futures prices have seen three consecutive days of significant increases, once again testing resistance levels at high levels.
There are currently few variables in the PVC supply and demand landscape, but on the demand side, it is worth noting that there may be a rush to export before the tax rebate policy takes effect, which would benefit the reduction of social inventory. Overall, in the short term, PVC spot market prices are likely to remain slightly stronger.
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