I. Accelerated Supply-Side Expansion, Highlighting Pressure from Capacity Release

In the second half of 2025, the domestic PVC industry officially entered a period of intensive capacity commissioning, with the concentrated implementation of new capacity further exacerbating the pressure on the market supply side. Specifically, approximately 1.7 million tons of PVC capacity are planned to be put into operation in the second half of the year. Among these, Fujian Wanhua's 500,000-ton unit achieved mass production in August; Tianjin Bohua's 400,000-ton unit is expected to officially start production in September, along with related units at Qingdao Haiwan Chemical; Gansu Yaowang's 300,000-ton mercury-free process unit is scheduled to begin trial operation; and Zhejiang's 300,000-ton unit has also entered the trial operation phase. By the end of 2025, the total domestic PVC capacity is expected to reach 29.72 million tons, a year-on-year increase of 7.92%, while the theoretical consumption during the same period is expected to be only 22.08 million tons, further intensifying the supply-demand imbalance in the market.

As of September 11, the average profit for calcium carbide-based PVC producers was -502 yuan/ton, and for ethylene-based PVC producers, it was -672 yuan/ton, indicating the entire PVC industry is mired in losses. Despite this, chlor-alkali producers, utilizing an "alkali-for-chlorine" operating model, have maintained high operating rates, with the industry's capacity utilization rate remaining stable at 79.55% in the first half of the year, even climbing above 80% in January and February. Since September, weekly PVC production has continued to increase month-on-month, further raising the capacity utilization rate to 79.94%, indicating increasing pressure on the supply side.

In addition, PVC social inventory has been accumulating since the beginning of July. As of September 11, according to new sample statistics, PVC social inventory increased by 1.75% month-on-month, reaching 934,200 tons, and increased by 8.63% year-on-year, indicating that the pressure from high inventory levels has not been fundamentally alleviated.

II. Slight Improvement in Demand, but Limited Overall Upside

The core sector of PVC consumption—the real estate market—remains sluggish, directly hindering the effective release of downstream demand. From January to July, national real estate development investment decreased by 12.0% year-on-year, and the year-on-year decline in new housing starts narrowed to 19.4%. However, the transmission of policy benefits to actual demand has a certain lag, failing to promptly drive a recovery in downstream demand. The overall operating rate of PVC pipe and profile enterprises remained at 30% to 40%, a slight increase compared to the previous month, but still 2 percentage points lower year-on-year. Although the traditional peak consumption season of "Golden September and Silver October" has arrived, downstream enterprises have insufficient order backlogs, weak purchasing intentions, and shorter inventory cycles, resulting in a strong wait-and-see attitude in the market and very limited actual growth in demand.

Regarding the export market, affected by both the temporary anti-dumping duty increase and the BIS policy, my country's PVC exports to India are expected to decrease in the second half of 2025 compared to the previous period. In July, PVC exports increased by 26.17% month-on-month to 330,600 tons, a year-on-year increase of 112.82%. However, this export increase is still insufficient to fully offset the supply pressure brought by new domestic production capacity. PVC exports are expected to decline in September.

III. Marginal Weakening of Cost Support

This week, the domestic calcium carbide market showed an upward trend. The mainstream trading price of calcium carbide in the Wuhai region rose to 2400 yuan/ton. Producers experienced smooth sales, and the overall market supply was tight. Currently, market inventory is at a low level, leading to tight supply for downstream enterprises and price increases in some regions. Looking ahead to next week, as calcium carbide supply gradually recovers and downstream demand weakens, the tight supply situation will be significantly alleviated. At the same time, coupled with the progress of inventory replenishment, the ex-factory price of calcium carbide is expected to show a slight downward trend, and the cost support for PVC will weaken marginally.

IV. Market Outlook and Key Focus Areas

In the short term, the PVC market exhibits a distinct characteristic of "strong expectations but weak reality." Although the anticipated peak season of "Golden September and Silver October" has driven a short-term rebound in futures prices, spot market trading remains sluggish. A substantial market reversal requires a significant improvement in the supply-demand relationship. Currently, the PVC market is under pressure due to multiple factors, including continued capacity expansion, weak demand, and policy maneuvering. The core imbalance between supply and demand has not yet been resolved, making a sustained upward price trend unlikely.