"In the first half of the year, affected by the epidemic, the chlor-alkali industry struggled to move forward. The production of caustic soda and polyvinyl chloride (PVC) decreased year on year. Caustic soda prices continue to decline, some enterprises have losses; PVC domestic demand increased, exports decreased, prices rose after the bottom. Overall, the chlor-alkali industry in the second quarter is significantly better than the first quarter, but the overall level of earnings is significantly lower than the same period last year. In the afternoon, the supply of caustic soda and PVC will increase slightly, but the overall situation of the industry in the second half of the year is expected to be better than that in the first half, driven by the increase in domestic demand such as the launch of new infrastructure projects." In July 31, China Chlor-Alkali Industry Association held online in the first half of 2020 industry economic operation analysis meeting, association information Department director Zheng Jiobin analysis said.
Production has fallen sharply
According to Zheng, the global chlor-alkali industry has been affected by coVID-19 to varying degrees in the first half of this year. At present, the market in some regions is gradually improving, but the pressure of supply and demand still exists.
According to the domestic situation, by the end of June, there were 161 caustic soda enterprises in China, with an additional production capacity of 420,000 tons/year and no withdrawal of production capacity, with a total output capacity of 44.22 million tons/year. In the first half of the year, caustic soda production was 16.998 million tons, down 2.3 percent from the same period last year, but output in May and June was up significantly.
In the first half of the year, there were 73 PVC enterprises in China, with an increased PVC production capacity of calcium carbide method of 400,000 tons per year, and no production capacity withdrawn, with a total production capacity of 25.58 million tons per year. The cumulative production of PVC in China was 9,688,000 tons, down 3.2% year on year.
From the perspective of foreign trade of leading products, the export volume of caustic soda in the first half of the year was 476,000 tons, down 13% year-on-year. Among them, the export volume of liquid and alkali decreased by 37.5% year on year; The volume of solid alkali exports increased 9% year on year. The export volume of domestic PVC pure powder is about 246,000 tons, with a year-on-year decrease of 10.5%, and the overall performance is poor.
Low downstream demand
"In the first half of the year, the domestic caustic soda market as a whole showed a volatile downward trend, with the average price of 32% ion membrane caustic soda falling 131 yuan/ton, mainly due to the contraction of downstream demand." Zheng Jiobin analysis said.
From the point of view of caustic soda main downstream alumina, alumina industry as a whole in the first half of the work load at 80%, down from 82% at the end of last year, output fell 5.1% compared with the same period last year. During the Spring Festival, due to the impact of the epidemic, road transport was not smooth, and the supply of raw bauxite in Shanxi and Henan was blocked. The load reduction of local alumina enterprises was relatively obvious. With the improvement of the epidemic situation, the operating load of the caustic soda plant is increased, but the downstream alumina enterprises resume work slowly, and the demand for caustic soda is limited. In the second quarter, the downstream production of caustic soda improved somewhat, but the overall performance of the paper and chemical fiber market was sluggish, and the production fell to a certain extent compared with the same period last year. China's machine-made paper and paperboard output was 57.573 million tons, down 4.8 percent year on year. Cloth output reached 16.9 billion meters, down 25.9% year on year. Overall downstream demand is relatively low, resulting in lower caustic soda prices.
From the point of view of THE PVC market, also escape the downstream of the relatively low demand for plastic inhibition. In the first half of the year, PVC market performance is relatively volatile, frequent price fluctuations, the overall v-shaped trend.
Specifically, PVC downstream plastic processing is a personnel intensive industry, after the Spring Festival, the rate of personnel return to work only in 20%~30%, PVC demand showed a large contraction. It was not until the end of February that the downstream PVC industry in China entered the recovery stage as the epidemic prevention and control achieved initial results and local governments issued policies to encourage enterprises to resume work and production. However, due to the obstruction of export orders, some processing manufacturers have personnel on duty but no orders can be executed, and enterprises have swelling inventory, which is difficult to form sufficient support for the PVC market. Low demand also makes PVC market all the way down, some chlor-alkali enterprises will advance or extend the spring maintenance plan, to a certain extent to alleviate the pressure of supply and demand in the market. In early April, the domestic PVC market showed signs of recovery, but the price increase is very limited. In May, the economy began to recover comprehensively, the downstream plastic processing industry improved, the PRESSURE on PVC inventory was effectively alleviated, and the upward trend of prices became gradually clear.
The future is worth looking forward to
For chlor-alkali late trend, Zheng Jiobin cautious optimism attitude. In terms of caustic soda supply, there will still be new caustic soda units put into production in Shandong and Jiangsu in the second half of the year, but the increase of production capacity is not big. In terms of demand, although the downstream alumina industry has no great support for caustic soda, it is expected that the caustic soda market in the second half of the year will be better than that in the first half of the year under the pull of new infrastructure and industrial chain conduction, but the price will be limited upward after bottling.
From the perspective of PVC aftermarket, although there will be new production capacity released in the second half of the year, domestic demand such as new infrastructure and real estate in the later period will drive the PVC industry more obviously, and the overall market is improving. In addition, now many PVC enterprises have been planning the "14th five-year" goal, focus on increasing the added value of products, start their own research and development or with the downstream cooperation research and development of special and special PVC resin, in order to achieve transformation and upgrading and enhance competitiveness, which will strongly drive the PRICE of PVC up.
In general, whether caustic soda or PVC market, the second quarter has been better than the first quarter, the second half of the market is worth looking forward to, not too pessimistic.
