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The data released by the 2011 chlor-alkali industry economic operation data release shows that the annual output of PVC and caustic soda has increased steadily. Although the price of caustic soda has risen sharply, the PVC market has continued to deteriorate. After the third quarter, the decline in the profitability of PVC largely offset the caustic soda. Profits for the business.
Zhang Peichao, assistant to the Secretary-General of the China Chlor-Alkali Industry Association, said that in 2011, chlor-alkali production enterprises will still be operating at a meager profit, and the operating conditions of “supplementing chlorine by alkali†will not change much in the short term. In 2012, the cost pressure of the chlor-alkali industry is relatively large, and a large amount of production capacity will be released. While the demand has been growing steadily, there is a certain variable in whether or not the chlor-alkali market can be effectively supported.
Stable growth in production and demand
Data show that from January to November 2011, caustic soda production was 22.639 million tons, an increase of 15.5%; PVC production was 11.734 million tons, an increase of 12.1%. Zhang Peichao estimates that annual production of caustic soda will be 24.5 million tons and PVC production will be 12.7 million tons.
The increase in production is related to the pull of downstream demand. The production of PVC downstream plastic products increased by more than 20%. As the main downstream industries of caustic soda products, the demand for alumina, paper and viscose fibers continued to increase. Among them, the viscose fiber production for January-November was 1.883 million tons, which was a year-on-year increase of 20.9%; and the alumina production from January to November was 315.62 million tons, an increase of 15.8%; pulp (raw pulp and waste pulp) production of 20.21 million tons, an increase of 9.9%.
Despite steady growth in output, the price trend of caustic soda and PVC is quite the opposite. In terms of caustic soda, affected by the devastating earthquake in Japan in early March, the tight supply of liquid caustic in the international market boosted the quotations of China's export companies. The positive effect of the export market on domestic prices was more obvious. In late August, under the drag of poor market conditions for liquid chlorine and chlorine products, the load of caustic soda production began to decline, and the reduction in the amount of supply in the market pushed the price of caustic soda higher.
In terms of PVC, the high prices of resources and energy at home and abroad, the rise in the prices of raw materials such as calcium carbide, and the increase in electricity and transportation costs have caused manufacturers to face operational pressures of rising costs. The contradiction between the supply and demand in the market caused by the continuous increase in supply has become an important reason for the rapid decline in market prices in the third and fourth quarters.
High supply pressure
Looking ahead to 2012, Zhang Peichao said that in terms of costs, crude oil prices will fall significantly less likely. Affected by this, prices of vinyl raw materials and coal, electricity and other resources will also show a long-term bullish trend; on the supply side, there are still several hundred in the year. Tens of thousands of tons of chlor-alkali production capacity will be put into operation. The release of new production capacity will put pressure on the supply of chlor-alkali products and may continue to show up in 2012.
In terms of sub-products, the caustic soda market in China in the first quarter of 2012 will postpone the domestic market trend in December. After the second quarter, if the chlorine-consuming products such as PVC and liquid chlorine still have no signs of improvement, the balance of alkaline chlorine will continue to restrict the starting load of the electrolyzer to a certain extent. At the same time, the continued release of new caustic soda production capacity in 2012 will put pressure on the latter market. Whether the growth of downstream demand can form an effective support. Still to be seen.
The high supply of PVC and sluggish demand are the main reasons for the current market downturn. The market expects that the large-scale construction of affordable housing throughout the country, and the effect of increasing demand for building materials in the later period is expected to become an important boost to the PVC market in the next year or two. factor. However, the long-term high of resource and energy prices, the higher social inventories in circulation, and the increasingly influential impact of financial markets will have a greater impact on the future market trend.
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