PVC Supply and Demand Remain Sluggish
PVC Futures Analysis: On September 26th, the PVC2601 contract opened high and fell throughout the night session, with a slight decline. The price weakened further in the morning session, reaching a low of 4884 before rebounding slightly, but the momentum was insufficient, and the market remained range-bound until the end of the afternoon session.
The PVC2601 contract opened at 4930, reached a high of 4931, and a low of 4884, with a spread of 47. Opening prices increased by 5,874 lots, bringing the total open interest to 1,121,467 lots. The settlement price was 4902, compared to yesterday's settlement price of 4925, a decrease of 23. Daily trading volume was 734,256 lots, with a deposit of 3.844 billion yuan and an outflow of 9.54 million yuan.
Regional Price Summary: Yuan/ton
PVC Spot Market: The mainstream transaction prices in the domestic PVC market declined before the holiday, showing no signs of improvement. Comparing price estimates: prices fell by 10 yuan/ton in North China, 20 yuan/ton in East China, and 20 yuan/ton in South China. Prices remained stable in Northeast China and Central China, while prices in Southwest China saw a 30 yuan/ton increase in the high-end.
Ex-factory prices at upstream PVC manufacturers remained stable in some areas, with some slightly lowering by 20-30 yuan/ton to boost transactions. Chlor-alkali producers, constrained by the sluggish pre-holiday market, lacked confidence in their quotations. Futures prices fluctuated narrowly at low levels, with spot market bids declining and market sentiment subdued.
However, the downward trend in futures prices favored spot trading, leading to slight adjustments in basis spreads. Basis spreads for the 01 contract in East China ranged from -100, -150, -200; in South China from -80, -150; in North China from -400, -450, -480; and in Southwest China from -280, -480, -660 for some sources.
While spot pricing offers a transaction advantage, downstream buyers remain less enthusiastic, with purchases primarily driven by immediate demand.
PVC Market Forecast:
Futures: The PVC 2601 contract futures price fell below the 4900 mark again, entering a low range with slight adjustments. Positions increased slightly throughout the day. Trading volume accounted for 22.7% of long positions and 25.5% of short positions. The futures price rallied around the middle band. Technically, the Bollinger Bands (13, 13, and 2) are narrowing, with prices remaining sideways around the middle band, lacking sufficient direction. The daily KD line continues to form a death cross, while the MACD line is narrowing.
Currently, there are no clear policy news turning points. With only two trading days remaining before the National Day holiday, some position reduction is expected. We maintain our previous view and expect futures prices to remain within a wide range of 4850-5020 in the short term.
Spot market performance remains sluggish as the National Day and Chinese New Year holidays approach, with prices failing to show a significant rebound. The market has largely missed the golden September trend, and current factors suggest a potential post-holiday rebound. Policy news is rehashing old news.
On September 26th, the Ninth Plenary Session of the State Council in August emphasized the need to "take effective measures to consolidate the recovery in the real estate market." Beijing, Shanghai, and Shenzhen have also introduced new policies to benefit homebuyers in various ways. However, market response has been muted. PVC supply and demand provide few variables to influence pricing.
Domestic demand remains stagnant, and export demand is intensifying due to expectations of a decline in India. With little positive news on the horizon, the spot market will likely remain range-bound in the short term.
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