Cost Support vs. Weak Supply & Demand— China PVC Market Enters a Stalemate

I. Price Trends:

Regarding market pricing, the benchmark PVC futures contract on the Dalian Commodity Exchange (DCE) fluctuated within the 4,800–4,950 RMB/ton range this week. After hitting a low point mid-week, the contract rebounded to close slightly higher, though it remains significantly below its year-to-date peak. The spot market mirrored the futures direction; spot prices to SG-5 grade PVC in East China dipped slightly at the start of the week before experiencing a mild rebound toward the end, resulting in limited overall price evaporative environment. According to the SunSirs Commodity Analysis System, East China spot prices to carbide-based SG-5 PVC rose by 0.21% this week, with the price range standing at 4,780–4,830 RMB/ton as of Friday. Transaction volumes in the terminal market remained generally sluggish, as downstream companies largely adhered to a "buy-on-demand" strategy, maintaining a cautious stance toward procurement and lacking the motivation to actively replenish their inventories.

II. Factor Analysis:

Supply-side Contraction Provides Market Support

Impacted by sector-wide losses, the overall operating rate of PVC manufacturers remained at a low level this week. The operating rate to ethylene-based PVC production plummeted to a near-standstill, as numerous facilities across various regions entered concentrated maintenance cycles, thereby gradually alleviating overall market supply pressure. Regarding carbide-based PVC, recent price strength in coal and semi-coke markets drove up carbide prices; according to the SunSirs Commodity Analysis System, carbide prices surged by as much as 4.47% this week. Consequently, production costs to carbide-based PVC continued to rise, with the current cost line now sitting roughly on par with spot market prices. Manufacturers have demonstrated a strong resolve to hold prices firm, leaving little room to further downside movement. Furthermore, the ongoing implementation of sector-wide energy conservation and inspection policies is expected to optimize the sector's capacity structure and regulate the market's supply landscape over the long term. Demand Remains the Primary Constraint Hindering Market Recovery

Currently, the overall operating rate among downstream PVC sectors remains at a low level and continues to decline on a month-over-month basis. Notably, the pipe and profile industries—which are highly correlated with the real estate sector—are experiencing weak order volumes; consequently, many small and medium-sized downstream companies are resorting to intermittent shutdowns and production based strictly on immediate demand. The domestic real estate sector is showing lackluster signs of recovery, with data on new project starts continuing to weaken. Furthermore, financial pressures on property developers remain unalleviated, resulting in a severe shortfall in the realization of end-market demand. Concurrently, the tailwinds from the export market are fading—compounded by rising production costs—leading to a sustained contraction in overseas orders and further dragging down overall demand performance.

In terms of inventory, domestic "social inventory" (market-wide stocks) of PVC remains elevated year-on-year and stands at a generally high level. Furthermore, dampened by sluggish demand, the pace of inventory destocking is extremely slow; this factor continues to cap the possible upside of any market rebound and stands as one of the most critical bearish factors currently weighing on the market.

III. Market Outlook

Regarding future market trends, analysts at SunSirs (Zhengzhou Commodity Exchange) anticipate that the domestic PVC market will, in the short term, continue to exhibit a pattern of low-range evaporative environment, with a core trading range projected between 4,700 and 4,900 RMB per ton. The overall market landscape is characterized by a complex interplay of bullish and bearish forces: upstream maintenance-related production cuts and cost-side support provide a floor to the market, while high inventory levels and weak demand continue to constrain the possible to any significant price rebound. Market participants are advised to closely monitor the progress of inventory destocking, price trends to carbide raw materials, and the pace of recovery in end-market demand from the real estate sector.