PVC: Price Rebound & Outlook (December 16)
PVC Futures Analysis: On December 16th, the PVC2601 contract saw narrow-range price adjustments in the night session. Price fluctuations were relatively mild after yesterday's gains. Prices continued to rise in the morning, breaking through the 4400 mark. Prices weakened slightly in the afternoon, but the decline was not significant, closing with a small gain at the high.
PVC2601 contract opening price: 4321, highest price: 4413, lowest price: 4306, price difference: 107, decrease in open interest: 142,053 lots, open interest: 491,553 lots, settlement price: 4360, previous settlement price: 4306, up 54, daily trading volume: 839,880 lots. Evaporated funds: 1.514 billion yuan, outflow: 400 million yuan.
Regional Comprehensive Price Overview: Yuan/ton
PVC Spot Market: The mainstream transaction price in the domestic PVC market finally rose, reversing market sentiment. Price comparisons show that prices rose by 40 yuan/ton in North China, 40-50 yuan/ton in East China, 40-50 yuan/ton in South China, 40 yuan/ton in Northeast China, 30 yuan/ton in Central China, and 20-50 yuan/ton in Southwest China.
Upstream PVC producers' ex-factory pricing sentiment has recovered somewhat, and manufacturers have begun to raise prices, albeit moderately, generally around 50 yuan/ton. Spot market prices in various regions rose further today. After yesterday's significant increase, sentiment remained high, with fixed prices continuing to rise. The advantage of spot pricing decreased after the futures price increase, and the basis widened.
Specifically, the basis for the January contract in East China was -(0, +50), in South China it was -(0, +20, +40), in North China it was -470, -500, -520, and in Southwest China, some sources had a single January contract at -(130, -150, -250). Spot market trading was flat today. Rising prices relatively suppressed demand, and spot transactions currently lacked price advantages, resulting in low downstream purchasing activity.
PVC Market Outlook:
Futures Market: Following yesterday's significant rise, the PVC2601 futures contract continued its upward trend on Tuesday, showing a positive price performance. The market saw a substantial decrease in open interest of 142,053 lots.
As the January contract approaches the transition to the main contract, open interest is rapidly decreasing, while the May contract saw a significant increase of 101,620 lots on Tuesday. The PVC January contract has shown a strong upward trend for two consecutive days, resembling a dramatic rebound.
Previously, prices were suppressed to extremely low levels, exhibiting a seemingly bottomless downward trend, while Monday and Tuesday saw a significant upward rebound, prompting short sellers to exit. Overall, given the upcoming change in the main contract, the rebound over the past two days may lack sufficient momentum in the short term; therefore, caution is advised when participating in the market.
In the spot market: Both futures and spot markets have seen a significant rebound for two consecutive days, with the spot market quickly following suit. On Tuesday afternoon, some sellers put their goods on the shelves, reluctant to sell. Upstream factories have also recently raised their ex-factory prices, but the increases have been relatively cautious.
On the one hand, with no change in supply and demand, upstream producers need to digest the sales pressure before the Spring Festival. On the other hand, the rebound from the sharp decline is not based on a change in fundamentals, and its upward potential may be limited.
The market reaction triggered by the renewed discussion of anti-rebound measures last Friday may still have some lingering sentiment, but there are currently no significant changes in supply and demand. Looking ahead, the previously excessively low levels in both futures and spot markets represent an irrational phase.
News-driven rebounds may push the spot market away from its bottom. In the short term, the PVC spot market may see a slight adjustment on an upward trend. Although there is still some upward expectation for prices, the extent of the rise may be limited.
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