The impact of upstream raw materials on PVC

The production cost of PVC is mainly affected by the cost prices of coal, coke, electricity, calcium carbide, crude oil, ethylene, VCM, etc. In addition, the price of raw salt will also have a certain degree of impact on the price of PVC through the value transmission of chlorine.

1.Due to the fact that thermal power generation is still the main source of industrial electricity in China, and coke mainly comes from coal, the prices of the three are basically bound, and a unified analysis will be conducted here. According to the preparation cost of PVC by calcium carbide method, 1 ton of PVC is equivalent to about 7000 kilowatt hours of electricity consumption, and 3 tons of coal consumption. The energy cost accounts for more than 50% of the production cost. Therefore, the price fluctuation of coal, coke, electricity and other energy will directly affect the market price of PVC.

2.From a global perspective, the production of PVC still relies mainly on the ethylene method. Due to the impact of the global financial crisis triggered by the subprime mortgage crisis, the price of crude oil has plummeted from $148 per barrel to $45 per barrel. With the decline in crude oil prices and the expiration of China's foreign anti-dumping measures, imports have already begun to impact the domestic market.

The overall price of crude oil remains within the range of 30-50 US dollars per barrel, and the decline in crude oil prices has made the cost advantage of using ethylene as raw material to manufacture PVC clear. The prices of crude oil, ethylene, imported vinyl chloride (VCM) and dichloroethane (EDC) will also directly affect the price trend of PVC. In addition, due to China only implementing anti-dumping measures against foreign PVC and not implementing protective policies against VCM and EDC, some domestic PVC manufacturers may directly purchase large quantities of VCM polymerized PVC at low prices from abroad. Therefore, the price of upstream products such as crude oil and VCM will have a direct impact on the price of domestic PVC.

3. Raw salt

The main consumption area of raw salt is the production of chlor alkali products. The chlorine generated after electrolysis of raw salt is used to produce PVC and other chlorine products, while the sodium part is used to produce pure alkali and caustic soda. Although chlorine is not a major influencing factor in the production cost of PVC, the sodium component is the main cost of caustic soda and soda ash. So, the price of raw salt will directly affect the price of alkali products and affect the market demand for alkali products. There is a chlor alkali balance problem between PVC and alkali, which indirectly affects the supply of PVC and thus affects its price trend.

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