Will ethylene-based PVC have an impact on calcium carbide-based PVC after the sharp drop in crude oil?

The first condition is that the policy allows, this condition has been satisfied since last year.
Since 2003, China has implemented anti-dumping against major foreign producing and selling countries.
In addition to the three investigation periods in the middle, China's foreign PVC anti-dumping policy has been implemented for a total of 16 years
.
On September 29, 2019, the PVC anti-dumping policy was officially cancelled, which marked the opening of the door for domestic PVC imports to the Chinese market
.

The second condition is the emergence of cost advantages.
Through the above analysis, with the sharp decline of crude oil, the cost advantage of ethylene-based PVC directly from oil refining has begun to be clearly manifested
.
The cost of imported materials from abroad will drop significantly, and the cost advantage of foreign PVC has also been met, but it is still uncertain whether the cost advantage will exist for a long time
.

The third condition is that the pressure of foreign PVC supply increases, and there is a willingness to export at low prices
.
At present, this condition is not obvious, but as the international public health incident becomes more and more serious, the possibility of weakening foreign demand also increases significantly, and the possibility of a significant decline in foreign PVC prices cannot be ruled out in the later stage
.
Recently, Formosa Plastics will announce the price of April cargo, and the price of Formosa Plastics will form a clear guiding significance for the future international market price
.
Based on the current price of US$855/ton for FAS Houston and US$850/ton for Asian sources CFR China, the equivalent RMB to China is still 7,500 yuan/ton and 7,050 yuan/ton, which is significantly higher than the domestic price
.
In the later stage, even after the prices of US and Asian sources have fallen sharply, it will still take 1-2 months for low-priced sources to enter the Chinese market
.

Therefore, for the second question, the policy conditions and cost conditions have been met, but there has not been an obvious oversupply situation abroad.
The foreign PVC price is still significantly higher than the domestic price.
If there is supply pressure in the foreign PVC price in the later stage, the price will plummet.
, will likely have an impact on the Chinese market, but it will take at least 1-2 months for low-priced sources to enter the Chinese market
.

3.
With the sharp drop in crude oil, will the cost of domestic ethylene-based PVC enterprises drop significantly?

China is dominated by calcium carbide method enterprises.
By the end of 2019, calcium carbide method PVC accounted for 81.
88%, and ethylene method PVC accounted for 18.
12%
.
China's PVC raw materials are mainly imported, including imported ethylene and imported VCM.
Only Qilu Petrochemical Co.
, Ltd.
starts from oil refining, and there are two other coal-to-methanol-to-ethylene routes
.

It can be seen from Table 2 that the main domestic products are imported ethylene and imported VCM, and the cost changes of these two routes are mainly compared here
.

Judging from the comparison between the cost of ethylene-based PVC in the imported ethylene route and the cost of Shandong calcium carbide process, since the second half of last year, the cost of imported ethylene-based PVC has been lower than the cost of Shandong calcium carbide process PVC
.
Since the second half of 2018, with the substantial release of ethylene expansion capacity, the ethylene price has fallen.
The CFR Far East ethylene price has fallen continuously from the highest US$1,400/ton in the second half of 2018 to about US$640/ton
.
Considering that imported ethylene needs a certain shipping period to arrive, the cost of ethylene is generally calculated based on the price of ethylene one month ago.
At present, the cost of ethylene-based PVC is about 5,500 yuan/ton.
In the past month, the price of ethylene has continued to fall sharply.
At present, the price of CFR ethylene has been It falls to US$640/ton.
With the arrival of low-priced ethylene supplies in the later period, the cost of ethylene-based PVC will drop to 5,000 yuan/ton based on the price of US$640/ton of ethylene, which will show a clear price advantage over domestic calcium carbide PVC
.

Judging from the trend of PVC cost of imported VCM route, in recent years, the supply and demand of VCM in the international market is still in a state of balance, and the price of imported VCM has been fluctuating at a high level since 2018
.
It also leads to higher costs for PVC enterprises that import VCM routes in China
.
Also taking into account the VCM arrival date, Zhuochuang uses the VCM price a month ago to calculate the current PVC cost.
The current PVC cost is about 6650 yuan/ton, which is higher than the calcium carbide method PVC cost
.
In the past month, the import of VCM has also dropped by about 80 US dollars / ton.
With the arrival of low-priced VCM supplies, based on the latest VCM arrival price of 710 US dollars / ton, the cost of PVC enterprises importing VCM is 6400 yuan / ton.
, still higher than the cost of calcium carbide PVC
.

In general, with the sharp drop in crude oil prices, it is more likely that the low price of imported materials will impact the domestic market in the later period, but it will take at least 1-2 months to truly enter the Chinese market
.
The PVC cost advantage of the imported ethylene route is also very obvious, but the overall scale of the enterprise is not large, the impact on the market is relatively small, and the enterprises that import VCM one after another still lack the cost advantage in the short term
.