International crude oil fell sharply, and PVC prices are difficult to get out of the independent market

In December last year, after OPEC+ cut production more than expected, international oil prices continued to rise
.
However, the US crude oil production continues to hit a record high, and at the same time, due to the impact of social public events, global crude oil demand may decline, in this case, the international crude oil price fell
sharply.
The OECD lowered its forecast for global economic growth to 2.
4% from 2.
9% previously, and believed that global economic growth could slip to 1.
5%
if public events are not controlled.
Some pessimistic economists believe that the global economy may show negative growth
in 2020.
Therefore, OPEC+ has continuously called for extending the production reduction period and increasing the intensity of
production cuts.
But at the OPEC+ ministerial meeting on March 6, the production cut agreement was ultimately not reached
due to Russia's opposition.
This has further deteriorated the fundamentals of the global crude oil market, with international crude oil prices plummeting and chemical prices falling
sharply.

Domestic PVC production is dominated by calcium carbide method, and the upstream raw material is coal, and the sharp drop in oil prices has little impact on the direct cost of PVC
.
But such a sharp drop in crude oil triggered panic in the market, causing commodities to fall
.
In addition, crude oil is the source of industrial products, and the sharp drop in oil prices will be transmitted to all chemicals, so PVC is still difficult to survive alone
.

Affected by social and public events, the resumption of PVC downstream pipe and profile enterprises that stopped production during the Spring Festival continued to be postponed, PVC consumption was not smooth, and inventory continued to rise, forcing enterprises to reduce prices and volume
.
At the same time, due to poor transportation, the supply of calcium carbide in the northwest region was affected, and the price of calcium carbide in eastern China rose
.
Due to rising costs and falling product prices, the profits of PVC companies continued to decline
.
Under this circumstance, PVC manufacturers began to overhaul
.
Last week, the operating load of domestic PVC manufacturers was 73.
26%, up 1.
61 percentage points month-on-month and down 8.
62 percentage points
year-on-year.
Among them, the calcium carbide PVC operating load was 75.
18%, up 1.
61 percentage points month-on-month and down 10.
30 percentage points year-on-year; the ethylene PVC operating load was 64.
26%, up 1.
59 percentage points month-on-month and down 0.
75 percentage points
year-on-year.
With the improvement of social and public events, PVC production has recovered, but it is much lower than the same period
of previous years.
The decline in supply has helped alleviate the current supply-demand contradiction
.

Recently, PVC downstream began to gradually resume work
.
Last week, except for Hubei, PVC downstream enterprises steadily resumed work
.
Among them, the operating load of enterprises such as flooring materials involved in exports has recovered by 60% to 80%, but affected by the slow resumption of infrastructure and real estate, the operating rate of pipes and profiles is still at a low level, only 30% to 50%, far lower than the same period of
previous years.
In addition, at present, the inventory of PVC production enterprises is at a high level, and the pressure of enterprises to destock is greater
.
Until terminal demand does not recover significantly, PVC prices are difficult to rise
sharply.

This year's PVC production capacity growth rate is about 7.
8%, the contradiction between supply and demand is much smaller than that of other chemicals, and the price trend is relatively firm
.
In the short term, although the production of PVC downstream pipes and profiles is slow, but with the improvement of social public events, the resumption of work in other downstream areas is relatively fast, coupled with the initiative of production enterprises to reduce the burden, so the contradiction between supply and demand of the PVC industry itself has not worsened, but has shown signs of slow improvement, and prices have stopped falling and stabilized
.
However, affected by the sharp fall in international crude oil prices, PVC suffered "accidental injury", and the price fell below the lower edge
of the falling triangle.
Therefore, it is difficult for PVC to get out of the independent market
.
Operationally, wait for the bottom to establish
.