PVC resin production capacity maintaining and increasing capacity utilization space under pressure

Background: As of the end of October, the annual production capacity of PVC powder in China has increased by over 1.2 million tons in 2023. After the end of the epidemic, the production of PVC resin production enterprises is also accelerating. Due to the impact of the international environment, global demand is generally weak, especially in Western countries such as the United States and Europe, where demand is declining. The global competition for PVC resin is accelerating, and industry inventory continues to remain high. The stability of production enterprises is being tested.

Maintain high production capacity growth rate

In the first half of 2023, with the annual production of 400000 tons of equipment in Fujian Wanhua, 400000 tons of equipment in Guangxi Qinzhou Huayi Chlor-alkali, and 400000 tons of equipment in Cangzhou Julong Chemical successively put into operation, the effective production capacity of PVC resin in China reached 27.62 million tons/year, with an annual production capacity growth rate of 4.54%. Since 2014, the production capacity has maintained continuous growth.

The characteristics of the newly added production capacity units are mainly reflected in: firstly, they are all ethylene based PVC resin production units, which further increases the proportion of domestic ethylene based production capacity. Secondly, the newly added units are all located in the eastern coastal areas of China, with abundant ethylene resources in or near the region. Among them, Wanhua in Fujian and Huayi Qinzhou in Guangxi are all industrial chain parks, with low production costs and energy consumption.

Slowing production growth

It is expected that the domestic PVC powder production will reach 22888300 tons in 2023, with a year-on-year increase of 4.19%. The month on month growth rate of ethylene based PVC resin production is expected to increase by 20-30%, while the production of calcium carbide based PVC powder is expected to decrease by about five percentage points. The domestic PVC resin supply structure will accelerate the transformation with the addition of new production capacity.

From the above data, it can be seen that the growth rate of production capacity is significantly greater than the growth rate of production capacity, and the industry's capacity utilization rate is expected to continue to be compressed. According to data statistics, the domestic PVC powder capacity utilization rate was 78.65% in 2021, but dropped to 75.94% in 2022. The average capacity utilization rate in October 2023 was further compressed to 74.36%. The data also reflects the pressure on production enterprises to start operations due to the increase in production capacity but insufficient production release.

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