PVC Futures, Spot: Situation & Outlook

PVC Futures Analysis: On August 13th, the PVC2509 contract saw a volatile opening in the evening session before a slight decline, but the drop was minor. Futures prices continued to fluctuate within a narrow range in the morning session.

Futures prices weakened slightly in the afternoon session, with a slight drop at the end of the day. The V2509 contract opened at 5047, reached a high of 5052, and a low of 5015, with a spread of 37. Positions decreased by 53,094 lots, leaving 478,578 open interest. The settlement price was 5036, compared to yesterday's settlement price of 5035, up 1. Daily trading volume was 614,714 lots, with deposits of 1.68 billion yuan and outflows of 198 million yuan.

Regional Price Summary: Yuan/ton

PVC Spot Market: The mainstream transaction prices in the domestic PVC market saw slight and flexible adjustments, with prices fluctuating within a narrow range. Comparing price estimates: North China saw a 10 yuan/ton increase, East China saw a 10-20 yuan/ton increase, South China remained stable, Northeast China remained stable, Central China remained stable, and Southwest China remained stable.

Ex-factory prices at upstream PVC manufacturers mostly remained stable, with a few seeing a slight increase of 20 yuan/ton. Futures prices continued to show a trend of position reduction due to month-end shifting, resulting in relatively narrow price fluctuations. Spot market prices saw fixed-price quotations in most regions and adjusted to local circumstances, with some seeing slight increases. However, there was room for negotiation in most transactions, with margin concessions being common in actual orders.

Basis adjustments were minimal, with basis quotations for the 09 contract in East China ranging from 80-150, South China from 60-80-120, and North China from 380-400-450. In Southwest China, with some sources, the 09 contract ranged from 300-480-530. Spot market transactions remained sluggish, with downstream purchases primarily driven by immediate demand, and spot price transactions were not currently advantageous.

PVC Market Forecast:

Futures: PVC 2509 futures contracts continue to see significant reductions in positions, but price fluctuations throughout the day were relatively narrow, with both bulls and bears exiting the market. Technically, the Bollinger Bands (13, 13, and 2) have narrowed significantly, with the futures price fluctuating within a small range below the middle band.

The direction of price fluctuations is unclear, and the market is relatively detached. Furthermore, at this point in time, there are no significant policy or news stimulus. The domestic cultural goods index is consolidating at a high level. At the midday close, the main domestic futures contracts saw mixed gains and losses.

In the short term, caution is advised regarding the 09 contract. We maintain our previous view and will monitor the price range of 4950-5080, with particular attention paid to the 01 contract.

Spot: 2601 futures contracts saw significant increases in positions. The inter-month spread between 2601 and 2509 contracts currently remains within a range of 130-150. This will also cause fluctuations in the spot basis quote after the rollover is completed.

At this point in time, the spot market is largely maintaining its momentum, with no significant adjustments in supply and demand. With the completion of PVC plant maintenance and the ramp-up of new Wanhua Chemical production capacity, supply pressure remains significant, while demand is unable to provide sufficient support.

High inventories, driven by this supply-demand dynamic, continue to act as a short-selling factor for the 2601 contract. However, after the completion of the month-end rollover, there remains some expectation of a policy turnaround in the golden September and October periods.

Therefore, overall, the PVC spot market is expected to remain primarily within a narrow range of adjustment in the short term, with the medium-term outlook remaining sensitive to policy developments.

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