Report Title - PVC Monthly Report: Continuous Accumulation of Social Inventory, Bearish on Rebound [1] Report Industry Investment Rating - Not provided Core Viewpoints - In August, the PVC price is expected to be more likely to fall than rise due to factors such as the continuous realization of new production capacity, weakening export margins, and the drag of the real estate sector on domestic demand [4] Summary by Relevant Catalogs Next Month's Outlook - Since the end of June, the inflection point of social inventory accumulation has emerged, and the recent accumulation speed has accelerated. The weak fundamental pattern is difficult to change. In August, it is expected to continue the inventory accumulation pattern in July [4] - This year is a big year for PVC capacity expansion, with 2.5 million tons of new production capacity planned to be put into operation (a year-on-year increase of 9%), and the expansion speed has reached a ten-year high. 1.7 million tons have been realized this year, and 500,000 tons from Yaowang and Haiwan are planned to be realized from August to September [4] - In August, only Inner Mongolia Junzheng and Xinzhongjia have planned device overhauls. Due to the previous anti-involution stimulus, the comprehensive profit of chlor-alkali has been restored to a neutral to high level in the same period, and the probability of enterprises' unexpected overhauls is not high. Both existing and incremental devices are under pressure, and the supply is abundant [4] - From January to June, the cumulative year-on-year growth rate of apparent consumption was -3%. The Politburo meeting in mid-year did not mention the real estate market for the first time, and the decline in real estate sales area has widened for two consecutive months. It is difficult to see an inflection point in the downward trend of the real estate market [4] - In terms of external demand, from January to June, India's export share dropped to 42%, and the impact of BIS policy was significant. The export market to India still faces uncertainties such as anti-dumping policies in the future, and the export growth rate may continue to slow down [4] Operation Strategy - Unilateral: Bearish on rebounds. For V2509, focus on the range [4,850, 5,150], and for V2601, focus on the range [5,000, 5,300] [5] - Arbitrage: The industrial chain inventory is under pressure, and the warehouse receipts continue to increase. Continue to hold the V3 - 5 inter-month reverse arbitrage [5] Market Review - In July, the market was oscillating and slightly stronger, rising first and then falling [7] - As of July 31, the V09 Changzhou basis was -91 yuan/ton. The center of warehouse receipts continued to rise, and the industry's willingness to sell and hedge at high prices remained strong. Since July, the fundamentals have weakened marginally, and the rise was mainly driven by policy expectations. The basis weakened marginally, and on July 25, the basis fell to -213 yuan/ton, reaching a monthly low [12] - As of July 31, the V9 - 1 spread was -135 yuan/ton, and the V3 - 5 spread was -257 yuan/ton. The real - end of the fundamentals is still weak, and the inter - month spread has been in a reverse arbitrage recently. Considering the continuous inventory accumulation in the fundamentals and the expectation of further inventory accumulation in the future, the industrial chain's hedging willingness is strong, and the V3 - 5 inter - month reverse arbitrage can continue to be held [14] Production - This week, the PVC output was 450,000 tons (a year-on-year increase of 6.4%). Since the beginning of the year, the capacity utilization rate has always been maintained above 75%, which is neutral to high compared to the same period, and the overhaul intensity is insufficient. The cumulative year-on-year growth rate of output from January to week 31 was +4.0% [17] - In July, a total of 900,000 tons of new devices from Wanhua Chemical and Tianjin Bohua were put into operation, and the pressure of new production capacity realization in August is higher [17] - In August, only Inner Mongolia Junzheng and Xinzhongjia have planned device overhauls. At the same time, a total of 1.2 million tons of devices from Ordos and Zhongyan are planned to be restarted [19] Real Estate - From January to June 2025, the cumulative year-on-year growth rates of new construction/ completion/ construction/ sales areas of real estate were -20%/-9.1%/-14.8%/-3.5% respectively. The decline in new construction area has narrowed for four consecutive months, and the decline in construction area has narrowed for two consecutive months. The front - end of the real estate market has improved marginally. The decline in completion area has narrowed, and the decline in sales area has widened for two consecutive months [22] - In June 2025, the year-on-year growth rate of newly built commercial housing in 70 large and medium - sized cities was -3.7%, and the decline has continued to narrow since November 2024; the year-on-year growth rate of second - hand housing prices was -6.1%, and the decline has continued to narrow since October 2024 [22] Domestic and Foreign Demand - From January to June 2025, the cumulative apparent consumption of PVC was 10.17 million tons (a year-on-year decrease of 3.0%). Domestic demand continued to be weak [25] - From January to June 2025, the PVC export volume was 1.96 million tons (a year-on-year increase of 660,000 tons, a year-on-year increase of 50%). In June, the export volume was 260,000 tons (a year-on-year increase of 21%). In terms of export countries, India's monthly exports decreased by 62% month - on - month, mainly affected by the approaching BIS certification. Considering that the shipping time from China to India is about 20 days, from late May to mid - June, domestic major export enterprises almost stopped all export orders to the Indian market; the Western export market still performed strongly, and the export volume to Kazakhstan increased by 100% month - on - month. From January to June, India's share of China's total export volume has dropped to 42%. In the second half of the year, although the BIS certification has been postponed, the Indian market still faces the impact of many uncertainties such as anti - dumping duties. The export growth rate may slow down compared with the first half of the year [25] Inventory - As of Thursday this week, the enterprise inventory was 345,000 tons (a year-on-year increase of 19%), and has been destocking for six consecutive weeks. Since late March, the enterprise inventory has been consistently higher than the same period in previous years, mainly due to the significantly higher new device commissioning intensity this year and the insufficient spring overhaul intensity under the "subsidizing chlorine with alkali" pattern, resulting in sufficient upstream supply [28] - As of Thursday this week, the large and small sample social inventories were 450,000 tons and 720,000 tons respectively. Since the end of June, the inflection point of social inventory accumulation has emerged, and the inventory accumulation speed has significantly accelerated in mid - to late July. The average weekly inventory accumulation of the large sample social inventory was 33,000 tons. Based on the current inventory accumulation speed, it is estimated that the social inventory will reach the same level as last year by the end of August [28] Profit - Since July, driven by the expectation of anti - involution policies, the domestic commodity market has rebounded collectively, especially the low - valued varieties that had fallen previously. The maximum increase of the PVC main futures reached 12.1%. Caustic soda also performed strongly due to the continuous subsidy of liquid chlorine and the support of the main downstream alumina. The maximum increase of the main contract in July reached 20.3%. The comprehensive profit of chlor - alkali enterprises has been significantly restored compared with the previous period. Considering that the subsequent supply - demand pattern is still under pressure, there is still room for compression of upstream enterprises' profits [31]