By Frbiz Tian

The outgoing 2006, China PVC capacity and output growth momentum to continue. Statistics show that in 2005 the National PVC production capacity of 9.72 million tons in 2006, soared to 12.84 million tons, up 32%; 1 October 2006, PVC production reached 6.64 million tons nationwide, up 21.6%, annual output is expected to 800 million tons. As the fast expansion of production capacity, excess supply and demand trend of increase, many companies start rate of only 80%.

Market, in 2006 the overall performance of the domestic general. PVC prices little changed a few months before, in June in southern China calcium carbide process PVC prices for 6750 ~ 6850 yuan (t value, the same below), ethylene PVC prices reached 6900 ~ 7250 yuan; in August, the domestic PVC market prices improve , East China, South China calcium carbide process PVC prices rose as high as 7850 ~ 7950 yuan, ethylene PVC prices rose to 8000 ~ 8100 yuan, calcium carbide and ethylene PVC prices at their annual maximum; but in September began, PVC prices began to decline, to 12 in mid-southern China calcium carbide PVC prices have come down to 6400 ~ 6550 yuan.

Looking ahead to 2007, the domestic PVC market, the overall situation is not optimistic, more variable. Affect the domestic PVC market and in 2007 the dominant factor remains the supply and demand, the overall trend of increased surplus will not see much change.

According to analysis, affecting the domestic PVC market and in 2007 the main factors:

Production capacity in recent years, rapid expansion, the domestic PVC supply and demand fundamental changes have taken place. However, according to forecasts, in 2007 the National PVC production capacity will continue growing, estimated to reach 15.02 million tons, and since several large new plant will be put into production, then the market will have significant effects. Increase ethylene production capacity to make PVC market pressure still heavy. Ethylene vinyl PVC high prices in the upstream, calcium carbide process PVC capacity continually increase, double blow, in 2006 sales are very difficult.

At present, the domestic production of calcium carbide PVC PVC production total more than 70%, as the rapid expansion of production capacity, market over-supply, can not easily raise prices, forcing prices of ethylene PVC can only low linger. Meanwhile, as oil, ethylene prices high, operating rates have been lower internal ethylene PVC manufacturers, operators will be able to relieve the pressure.

Macroeconomic control in 2006, as countries to strengthen macro-control, and real estate sectors of the larger, resulting in demand for PVC building materials industry contraction. Estimated that this impact will continue until 2007. Meanwhile, the related cycle of economic, environmental and energy areas of macroeconomic policy will continue to impact PVC market trends.

Exit 1 October 2006, total imports of domestic PVC was 1.22 million tons, down 15.8%; year exported 450,000 tons, an increase of nearly 10 times. Substantial growth in exports as PVC, June 28, 2006, Indian Commerce and Industry issued a notice to accept four PVC producers in India to apply, from China (including China Taiwan), Indonesia, Japan, Korea, Malaysia, Thailand and the United States an anti-dumping suspension PVC the initial investigation. August 15, Turkey issued a public notice, from now on 200 days to produce from China, PVC (all not yet reached our goods) collected 320 U.S. dollars per tonne deposit.

Visible, with the excess of domestic PVC production towards exports also suffered a troubled anti-dumping. If you can not successfully expand exports, rapid growth of production capacity can not be digested in time, will inevitably impact on the domestic PVC market.

Lower demand in 2006 despite lower domestic PVC certain the growth rate remains about 10% but with up to 32% of the growth rate capacity compared to demand growth is clearly unable to digest the excessive growth of production capacity. If you continue to over-expansion of production capacity in 2007, excess supply of domestic PVC market trends will continue to worsen.

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