PVC exports are booming, and blind expansion is a concern

The primary shape of polyvinyl chloride (hereinafter referred to as PVC) is an important industrial raw material. According to customs statistics, in January 2007, Tianjin Port exported 16,000 tons of PVC, valued at US$12.05 million, an increase of 99.6% and 1.2 times from the same period of last year (the same below).
I. Main characteristics of Tianjin Port's PVC exports in January this year 1. The main export markets are India, Brazil, Egypt and the European Union. In January 2007, the Tianjin Port exported PVC to India to 4,461 tons, while there was no export to the country during the same period of last year; it exported 2,480 tons to Brazil, an increase of 4.6 times; to Egypt, 1,870 tons, an increase of 24.6%; and to the EU, 1,204 tons, an increase of 21.7 times. The 4 persons together accounted for 63.6% of the total PVC output of the Tianjin Port during the same period;
(b) General trade exports are the mainstay. In January 2007, Tianjin Port exported 10,000 tons of PVC by general trade, an increase of 2.4 times, which accounted for 62.5% of the total amount of PVC exported by Tianjin Port during the same period.
Second, the main reasons for the recent increase in the export of PVC in Tianjin Port 1. The domestic PVC industry has developed rapidly. Before 2003, the domestic PVC market was in short supply, and the output was insufficient to satisfy a large number of consumer demand, making domestically-made PVCs operate at higher prices, attracting a large number of domestic and foreign investments into the field. Since September 2003, China has imposed anti-dumping duties on imports of PVC from some countries and regions. The threshold for foreign products to enter the domestic market has increased, which objectively protects the domestic PVC industry. Two reasons prompted the PVC industry to enter a rapid growth period. Since 2004, the average annual growth rate of PVC production capacity in China has reached 50%, and there has been a trend of overcapacity. By 2005, the annual production capacity of polyvinyl chloride in China has reached more than 9 million tons, which has surpassed the United States as the world's largest PVC producer.
(b) The domestic PVC price is lower than the international market. At present, PVC production mainly uses ethylene and calcium carbide methods. Among them, the ethylene method has characteristics of high product quality, low energy consumption, no pollution, and stable product quality, but due to the limitations of its raw materials and processes, the production cost is higher than that of the calcium carbide method, and the foreign company with the ethylene process as its main production process is polyvinyl chloride. The price stays at a high of $800 to $950 per ton. Most of the calcium carbide PVC plants in China are built near coal mines and are rich in limestone and coal resources. The raw material prices are extremely low, and they are more flexible in market prices. The cost per ton is 600 to 1,000 yuan lower than that of foreign companies. Products in the international market have a certain degree of competitiveness.
(C) Ethylene PVC uses quality advantage to actively occupy the export market. Through visits to companies, we learned that some domestic production companies that use ethylene as the main production process cannot compete with calcium carbide production companies in areas where domestic building materials, profiles, and packaging do not require high quality PVC, forcing them to use quality advantages and actively expand The international market for product quality requirements. For example, the European Union has strict PVC standards and has high requirements on the quality and stability of products. Although the calcium carbide method has a price advantage, the product quality cannot meet the EU standards and it is difficult to penetrate into its market. In addition, the recent decline in international oil prices has further reduced the cost of purchasing raw materials for this production method, which has greatly stimulated the export of products.
Third, the main issues worthy of attention (A) there is the risk of foreign anti-dumping sanctions. At present, China's PVC exports have grown too fast in the blind competition among companies, and export prices have been low. In 2005, the average export price of Tianjin ports was US$779/ton, and in 2006 it continued to fall to US$754/ton. In some countries, China’s PVC imports have soared and prices have dropped. India has launched anti-dumping investigations on suspension-grade polyvinyl chloride imported from China and other countries and regions. Therefore, China's PVC exports are subject to foreign anti-dumping sanctions.
(b) The domestic PVC industry structure is irrational. Calcium carbide production of polyvinyl chloride, not only high energy consumption and serious pollution, has long been abandoned by the developed countries, China has also formulated the "access conditions for the calcium carbide industry" and other policies to limit its development. At present, China's PVC industry is divided into the chlor-alkali industry. According to the five-year plan for the chlor-alkali industry, calcium carbide process PVC production should be less than 40% (currently 60%), but due to the ineffective implementation of measures, the development of calcium carbide industry can not be curbed, low energy Consumption and non-polluting ethylene production companies still face tremendous pressure.
(3) There is a blind competition and the price of mutual reduction is serious. Regardless of whether the ethylene or calcium carbide production companies have expanded their production capacity, they have caused short-term supply over-supply and stopped production to limit production, resulting in serious waste. In the process of product export, although the current international market demand is relatively strong, blind competition allows companies to continue to lower prices each other in exports. According to Tianjin Lejin Daxie Chemical Co., Ltd., due to the tendency of many PVC manufacturers to become profitable and blind, resulting in unhealthy development of the industry, vicious competition will cause Chinese companies to lose the pricing power of export products.
IV. Relevant Suggestions Adhere to the principle of controlling total production capacity, eliminating backward technologies, rationally utilizing resources, reducing environmental pollution, promoting the principle of joint reorganization, and accelerating industrial restructuring. Establish industry associations to coordinate the vicious competition among enterprises. Improve calcium carbide slag treatment technology to reduce the processing pressure of calcium carbide process PVC waste residue.

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