1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The PVC industry in China has formed a cross - regional circulation pattern of "production in the west and consumption in the east, production in the north and consumption in the south". The industry concentration is increasing, and the scale effect and risk - resistance ability of leading enterprises are enhanced. The cost structure varies by process, and marginal devices are key to observing cost support and supply changes [4]. - The marginal devices of PVC futures are defined from multiple aspects such as policy guidance, old - age devices, production scale, and raw material procurement. Small - scale, old - age, and high - cost marginal capacities with external raw material procurement are core variables affecting short - term supply elasticity and medium - long - term cost curves [5]. 3. Summary by Relevant Catalogs PVC Industry Chain Supporting Analysis Overall Industry Situation - In 2025, the domestic PVC industry entered a period of concentrated production capacity release, with new production capacity of 2.2 million tons and an annual growth rate of 8%. The new capacity is mainly ethylene - based, increasing the proportion of ethylene - based PVC to 31% and diversifying the raw material routes. The industry has a resource - oriented layout, with the northwest and east regions having different advantages, forming a cross - regional supply - demand pattern [11]. - The industry concentration is high, and as of 2025, the top ten enterprises/groups accounted for 43% of the total production capacity, which strengthens the scale effect and market bargaining power of leading enterprises and affects market supply stability and price volatility [17]. - In terms of upstream raw materials, PVC production is mainly based on calcium carbide and liquid chlorine, and 93% of PVC production capacity is equipped with caustic soda plants, showing a high degree of integration in the chlor - alkali industry [19]. Calcium Carbide - Based PVC Supporting Analysis - In the calcium carbide - based PVC industry, enterprises with self - supplied calcium carbide account for 73% of the calcium carbide - based production capacity, mainly in the northwest and east regions, while those with externally - purchased calcium carbide account for about 27%, distributed in multiple regions, and their costs are affected by regional supply and transportation fees [20]. - The northwest region is a major surplus area of calcium carbide, while the north, central, and east regions are net purchasers. The cost of enterprises with externally - purchased calcium carbide is higher, and they are more sensitive to price fluctuations, making them key indicators for observing marginal cost changes and supply - demand adjustments [22]. - Many externally - purchased calcium carbide - based devices are in a long - term shutdown or low - load state. With the decline of chlor - alkali integration profit, some enterprises may consider reducing production [25]. - About 62% of PVC enterprises are equipped with self - supplied power plants, mainly in the northwest. In the calcium carbide - based process, enterprises with both self - supplied power plants and calcium carbide have a cost advantage, while those without either are at a disadvantage. The northwest has the lowest production cost due to coal - power integration [29]. - Most externally - purchased calcium carbide - based enterprises are operating at reduced loads, and the power spot market reform has a greater impact on them [30][32]. Ethylene - Based PVC Supporting Analysis - The raw material sources of ethylene - based PVC are diversified, including integrated ethylene, externally - purchased ethylene, and externally - purchased vinyl chloride monomer (VCM). The ethylene - based process is in line with national policies and has environmental advantages, and new PVC plants are mainly ethylene - based [33]. - Among domestic ethylene - based PVC production capacity, 31% of enterprises are self - sufficient in raw materials, while 69% rely on external procurement. Different procurement modes have different cost challenges and price sensitivities, and marginal devices are affected by external factors such as international ethylene prices and VCM import - export policies [34]. PVC Marginal Device Analysis Policy - based Identification of Marginal Capacities - Future marginal elimination capacities will mainly focus on calcium carbide - based devices with backward processes, small - scale devices, and old - age devices. Enterprises without self - supplied power plants and relying on external procurement may operate at low loads or shut down [40][41]. Capacity - Scale and Production - Time Analysis - In 2025, the PVC industry showed a significant trend of large - scale devices. Devices with a single - set capacity of more than 300,000 tons/year accounted for 60% of the total capacity, while those less than 200,000 tons/year accounted for 20%. Small - scale devices face operational pressure and a trend of being phased out [42]. - About 12% of the existing PVC production capacity was put into operation before 2005. After excluding leading enterprises' and long - term shutdown capacities, about 8% is from relatively old and small - scale devices. The impact of the "anti - involution" policy depends on subsequent implementation details [46]. Ethylene - Based Marginal Devices - Among the old - age devices, 3.6% are ethylene - based, with a relatively low risk of elimination. However, high - cost enterprises relying on external raw materials, such as Suzhou Huasu and Cangzhou Julong, are in a long - term shutdown state. Cangzhou Julong is promoting a port transformation project to reduce costs and enhance supply chain stability [50]. Calcium Carbide - Based Marginal Devices - Among the old - age devices, 8.8% are calcium carbide - based, which are more likely to be eliminated. Some "small - scale and externally - purchased calcium carbide" devices have already exited. Among the remaining 1.69 million tons of old - age calcium carbide - based PVC production capacity less than 200,000 tons, 720,000 tons are externally - purchased calcium carbide devices, which are currently operating at low loads and their operating conditions will affect industry supply elasticity and cost support [51].

News Summary Core Viewpoint - The PVC market is experiencing a mixed situation with slight recovery in pipe production rates, while overall demand remains weak due to high inventory levels and limited downstream activity [1][3][4]. Group 1: Market Dynamics - Qilu Petrochemical has restarted a 360,000-ton facility, while LG Chem and Henan Lianchuang are undergoing maintenance on their 400,000-ton facilities, leading to a decrease in PVC capacity utilization [1]. - The current spot prices for PVC in Hangzhou are fluctuating, with prices for different grades ranging from 4,470 to 4,620 CNY/ton [1]. - Social inventory of PVC has decreased by 1.27% week-on-week to 1,028,300 tons, but shows a year-on-year increase of 23.76% [2]. Group 2: Institutional Perspectives - Guangzhou Futures notes that new production capacities from Tianjin Bohua and Zhejiang Jiahua are adding supply pressure, while downstream operating rates remain low, limiting demand improvement [3]. - Guotou Anxin Futures highlights that the cancellation of India's BIS certification has a limited overall impact, with market focus shifting to potential anti-dumping policies from India [4]. - The PVC market is expected to experience narrow fluctuations due to high supply and weak demand, with the 2601 contract projected to trade between 4,500 and 4,900 CNY [3].

Group 1 - PVC futures maintain a weak trend after the market opens, with various plants undergoing maintenance and some resuming operations [1] - Domestic trade prices in the Ulanqab region are quoted at 2500 yuan/ton, with strong cost support from the calcium carbide market [1] - Ethylene prices in Northeast Asia and Southeast Asia have decreased by 15 dollars/ton, indicating a weakening cost trend for ethylene-based production [1] Group 2 - Downstream terminal stocking demand remains subdued, and supply expectations are slightly increasing, putting pressure on industry inventory [3] - New production capacities from Tianjin Bohua and Zhejiang Jiahua contribute to ongoing supply pressure, while downstream demand remains limited due to high temperatures [3] - Despite recent production declines and increased maintenance, social inventory has slightly accumulated, leading to a low valuation of PVC from the perspective of chlor-alkali integration benefits [3]

Investment Rating - The report maintains a "Positive" investment rating for the chlor-alkali industry [11] Core Insights - The chlor-alkali industry is currently at a low point, with potential for significant elasticity in response to demand or supply-side stimuli. The industry is closely tied to GDP growth, with steady growth in caustic soda and PVC exports [5][10] - The report suggests focusing on companies that integrate low-cost calcium carbide PVC with caustic soda and those using the ethylene method for PVC production [10][11] Summary by Sections Chlor-Alkali Industry Overview - The chlor-alkali industry is a fundamental chemical industry, producing caustic soda, chlorine, and hydrogen through the electrolysis of sodium chloride solution. The industry is integrated, with chlorine often converted into PVC due to transportation difficulties [20] - In 2024, the caustic soda industry is projected to have a production capacity of 48.9 million tons, with an average price of 3,263 CNY/ton, leading to a market value of 255.4 billion CNY. The PVC industry is expected to have a capacity of 29.39 million tons, with an average price of 3,262 CNY/ton, resulting in a market value of 269.5 billion CNY [20][5] Caustic Soda Analysis - Caustic soda is a high-energy-consuming product, with electricity costs accounting for approximately 60% of its production costs. The industry is expected to see a compound annual growth rate (CAGR) of 2.4% from 2014 to 2024 [29][40] - The current production capacity for caustic soda is 49.8 million tons/year, with expected new capacities of 226,000 tons in H2 2025 and 468,000 tons in 2026, reflecting growth rates of 4.5% and 9.4% respectively [40][41] PVC Market Insights - The PVC industry is heavily reliant on real estate and infrastructure sectors, with demand closely linked to the real estate cycle. Since 2022, a slowdown in real estate growth has led to a decline in demand for PVC products [9][55] - In 2024, the PVC industry is projected to have a production capacity of 29.39 million tons, with expected new capacities of 180,000 tons in H2 2025 and 40,000 tons in 2026, indicating growth rates of 6.0% and 1.3% respectively [61][62] Industry Outlook - The chlor-alkali industry is expected to improve structurally, with potential for significant elasticity in response to demand or supply-side changes. The report emphasizes the importance of energy consumption and supply-side upgrades as key drivers for future growth [10][70] - The report highlights the need for the industry to adapt to stricter energy consumption policies and the potential for older, less efficient production facilities to be phased out [79][81]