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2010 will be a critical year for the development of PVC industry

2010 will be a critical year for the development of PVC industry

  • Categories:News Center
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  • Time of issue:2011-04-29 00:00
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(Summary description)

2010 will be a critical year for the development of PVC industry

(Summary description)

  • Categories:News Center
  • Author:
  • Origin:
  • Time of issue:2011-04-29 00:00
  • Views:
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Since 2009, the production capacity of the PVC industry has been increasing. Pingmei Shenma increased its production capacity by 300,000 tons/year in September, Shaanxi Beiyuan increased its production capacity by 200,000 tons at the end of the year, and Xinjiang Zhongtai increased its production capacity by 1.95 million tons/year. It is expected that the supply in 2009 will reach 16.745 million tons/year and the apparent consumption will reach 10.64 million tons/year. The situation of overcapacity is very serious. In addition, there are some projects that were put into production in 2010 and 2011, and the production capacity will continue to grow in the future. Hanwha’s 300,000-ton/year project is expected to be completed in 2010, and Anhui Huasu’s 1 million-ton project is expected to be put into operation in May 2011. The supply of PVC production capacity has exceeded demand, but the expansion of the industry continues. According to statistics, in 2009, 9 companies in the chlor-alkali industry had built new constructions and expansions, with a new production capacity of 1.67 million tons, and the national production capacity would reach 17.48 million tons per year.

In 2010, domestic production capacity may reach about 20 million tons/year, which has exacerbated the situation of overcapacity, which has become the main factor restraining the rise of PVC prices.  

2010 is a critical year for the development of the polyvinyl chloride (PVC) industry. Industry insiders are also extremely optimistic about the development of the PVC market in 2010, but this will also depend on its price and capacity. How can the polyvinyl chloride (PVC) industry take a recovery path? The key is that all major chemical companies can benefit from it and taste the sweetness.

The domestic PVC market may appear high consumption, high cost, high price 'three high' phenomenon. PVC production and sales may reach 11 million to 12 million tons, the annual price may exceed 9,000 yuan, the operating rate may reach 65%, and the operating rate may reach 80% in some months. The entire industry will continue to accelerate adjustment and revitalization to achieve a more healthy development.

Let me talk about the reduction in actual production capacity of calcium carbide. 75% of my country's PVC production capacity is calcium carbide method, and most of the new projects in recent years are calcium carbide method. It is estimated that the apparent consumption of PVC will reach 11.7 million tons this year, and the domestic production will reach 11 million tons, of which 9 million tons are calcium carbide materials, and the consumption of calcium carbide will reach 13 million tons. In addition to consumption in other areas, demand for calcium carbide will reach this year 16.5 million tons. At present, my country's calcium carbide production capacity is about 21 million tons, and the operating rate must reach 75% or more to meet demand. However, the technical equipment of many enterprises in the calcium carbide industry in my country belongs to the state's explicit order to eliminate outdated devices, and they are generally in a state of "high energy consumption and high pollution", and part of their production capacity has been idle for a long time. As the country continues to increase its efforts to eliminate backward production capacity, the actual production capacity of the calcium carbide industry will shrink this year, and there may be insufficient supply in some months, which will affect the production and supply of PVC.

Besides, the domestic PVC import and export pattern will also support the rising market. Since September 2008, my country has suspended the levy of anti-dumping duties on PVC imports. Imported goods have a large impact on the domestic market under the cost advantage, accounting for about 30% of domestic consumption. At the end of September 2009, my country introduced a policy of re-levying anti-dumping duties. It is expected that the average monthly net imports this year will not exceed 50,000 tons, and the annual net imports will not exceed 700,000 tons. my country's PVC imports continue to fall, and the pattern of continued increases in exports will become one of the important factors driving the recovery of the domestic PVC market.

As for ethylene, the rising oil price keeps the price of ethylene high. Comparing the crude oil cracking spread data and the ethylene price in the past three years, it can be found that there is a negative correlation between the crude oil cracking spread and the trend of ethylene, and the cracking spread reflects the profit margin of the refinery to a certain extent. When the profit is high, the operating rate of the refinery is high, and the supply of ethylene will be sufficient; and when the profit is squeezed and the refined oil storage is expanded, the operating rate of the refinery will be forced to decrease, and the supply of ethylene will be reduced accordingly. At present, the international crude oil cracking spread is at a low level in the past three years, and the shortage of ethylene supply will not be effectively alleviated for a long time. Therefore, it can be expected that the price of ethylene will remain high this year.

According to industry analysts, when crude oil prices are hovering between US$30 and US$40/barrel, manufacturers of calcium carbide PVC production processes, which account for 3/4 of my country’s output, are generally at a loss due to the loss of cost advantages and sluggish downstream demand. In the second half of the year, as the price of crude oil rebounded to more than 70 US dollars per barrel, the cost advantage of calcium carbide method PVC began to manifest. Enterprises began to get rid of losses and entered a state of meager profit. However, severe overcapacity restricted the rise of PVC prices.

Overcapacity is also a key consideration for PVC. Although it is said that its capacity is severely overcapacity, the concentration of my country's PVC industry is lower than that of chemical products such as PTA and LLDPE. There are only more than 10 manufacturers of PTA and LLDPE in the country. The top 4 PTA manufacturers have more than 50% of the national production capacity. The LLDPE capacity and output of the two major groups, Sinopec and PetroChina, accounted for 87% and 88% of the country's total. On the issue of production capacity, playing a greater role will also face major challenges.

In fact, PVC is still a typical example of recovery, even if it has a higher marketability. PVC is widely used in various fixed asset investment projects. In 2010, China's fixed asset investment investment is expected to maintain rapid growth. Among them, 670 billion government public investment and a large number of unfinished projects last year will be the most important driving force for investment.

 

-------Source "China Chlor-Alkali Network Forum"

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