1. Production capacity distribution

PVC products, namely polyvinyl chloride products, are mainly upstream of the PVC industry. From the perspective of geographical distribution of production capacity, my country’s PVC production capacity is mainly concentrated in the Northwest and North China regions. Among them, the PVC production capacity in the northwest region accounts for more than 50% of the country’s total production capacity. The domestic PVC industry is highly competitive. Although there are only about 100 domestic PVC manufacturers, the industry concentration is relatively low. In 2020, the CR10 of my country’s PVC industry is only 34%.
2. Changes in output

After the economic crisis in 2008, driven by the 4 trillion economic stimulus policy, the domestic PVC production capacity has experienced a recovery growth, and the production capacity has continued to expand. By 2013, the production capacity reached the highest value of 24.77 million tons.

However, from 2013 to 2015, China’s PVC industry has obvious overcapacity, the industry as a whole is in a state of loss, and the production enthusiasm of enterprises is not high. In 2014, the production capacity began to show negative growth. In 2015, the PVC production capacity reached a low point of 22.22 million tons, and the overall production enthusiasm of the enterprise was not high.

Under the background of the overcapacity policy, the PVC industry has undergone market-oriented adjustment, and outdated production capacity has been gradually eliminated, and the effective production capacity is in a gradual downward trend, with a cumulative decline of about 2.5 million tons in three years. At the end of 2015, the situation that the supply of the PVC industry was seriously exceeding the demand was alleviated, and the supply and demand pattern returned to a relatively balanced state. In 2016, the development of the PVC industry improved, the operating rate rose steadily, the capacity utilization rate increased, and the new production capacity was accelerated again, and the domestic PVC production capacity maintained a steady growth trend.

At the end of 2019, my country’s PVC production exceeded 20 million tons, and the domestic production capacity in 2020 exceeded 27 million tons. Total capacity has increased by 3 million tonnes between 2017 and 2020.

In 2021, although the production units will maintain a high-load operation, the new PVC production capacity in my country will be relatively small, with a year-on-year increase of only 1.83%. Only the Shanxi Ruiheng 100,000-ton plant and the Gansu Jinchuan 60,000-ton plant will be put into operation, with an additional capacity of 160,000 tons. Released, and the new production capacity has not reached full production. The new production capacity in 2021 will mainly be released in the second half of the year. Since the second half of the year, the maintenance plan of production enterprises will gradually decrease, and the PVC supply is expected to increase. The tight market supply situation is expected to ease, but the probability of supply and demand imbalance is small.

However, judging from the new production capacity put into production in recent years, the production capacity release progress of the PVC industry is increasingly affected by policies such as environmental protection, and the approval procedures are becoming more and more strict, and the rapid growth of production capacity is expected to be limited.

3. Upstream production

As of the end of 2021, my country’s total PVC production capacity is about 26.25 million tons, of which calcium carbide PVC production capacity is 20.6 million tons, accounting for 78.7% of the total production capacity. Therefore, calcium carbide prices directly affect PVC prices. my country’s calcium carbide production capacity has decreased from 48 million tons in 2015 to 41 million tons in 2020. From the perspective of calcium carbide output, from 2015 to 2019, my country’s calcium carbide output was relatively stable, basically maintaining at about 26 million tons. With the gradual clearing of the old domestic production capacity, the utilization rate of calcium carbide production capacity in my country continues to increase. In 2020, the utilization rate of calcium carbide production capacity in our country will reach 67%.

In 2021, due to factors such as rising coal prices and dual control of energy consumption, the start-up of calcium carbide manufacturers will be greatly affected. A loss occurs. At the same time, the supply of calcium carbide was insufficient, and some PVC production enterprises were forced to start work to reduce the burden, and the PVC supply continued to shrink. Looking forward to the future, in 2022, China will still grasp the dual control of energy consumption, calcium carbide prices should still have strong support, and PVC will also face high cost support.

Therefore, although our country’s PVC is still dominated by calcium carbide method, the proportion of ethylene method production capacity is gradually increasing. Ethylene is one of the largest chemical products in the world, and it is also the core of the petrochemical industry. It is one of the important indicators to measure the development level of a country’s petrochemical industry. And polyvinyl chloride is an important downstream of ethylene, and its demand accounts for 5% of the total demand for ethylene.