In January 2025, China's production of polyvinyl chloride (PVC) reached an impressive 2.0963 million tons, marking a 2.16% increase from December 2024 and a 4.19% rise compared to the same month in 2024. This production surge can be attributed to the output from the calcium carbide method, which amounted to 1.5319 million tons, reflecting a slight 0.58% increase month-over-month and a 2.07% increase year-over-yearFurthermore, the ethylene method saw a notable production of 564,400 tons, showing a significant rise of 6.70% from December and 10.41% from January of the previous yearAccording to data from Longzhong, the number of operational maintenance activities among domestic PVC manufacturing enterprises saw a 5% decrease from the previous month and a substantial 28% drop compared to last year, allowing for higher production rates following the 2.052 million tons produced in December 2024.

The decline in maintenance activities has led to an uplift in the capacity utilization rates for PVC manufacturing firmsIn January 2025, the average capacity utilization exceeded 81.60%, a noteworthy 1.3% increase from December and up by 1.77% from January 2024. This bolstered activity resulted in the new high output of PVCThe January production figures not only reflect a month-on-month improvement but also highlight a growing trend in the industry's operational efficiency.

Yet, despite the increasing output and capacity utilization, challenges loom for PVC manufacturers regarding profit marginsThe economics of the chemical industry, particularly in the production of PVC, is characterized by fluctuating costs and profit scenariosFor example, the average gross margin for domestic calcium carbide PVC producers in January 2025 was recorded at -539 RMB per ton, an improvement from -744 RMB per ton in December 2024. While at first glance this increase of 205 RMB per ton appears minimal, it indicates deeper implications for the businesses involvedThe reduction in losses lessens the cash flow constraints imposed on manufacturers, allowing them to ease financial pressures previously aggravated by substantial deficits

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With improved liquidity, companies are better positioned to procure necessary raw materials, assure timely employee remuneration, and perform essential equipment maintenance.

Moreover, when examining the chlorine-alkali producers from the eastern regions, the performance of their sale margins for caustic soda -- a major product of interest -- serves as an insightful benchmarkIn January 2025, the overall industry margin (considering both the chlorine-alkali production and PVC) surpassed 30 RMB per ton, in stark contrast to a loss of -133 RMB per ton recorded in December 2024. This significant turnaround can be attributed to a buoyant caustic soda market, which has benefited from sturdy demand coupled with stable supply conditionsThe rising prices for caustic soda have provided a vital revenue stream for manufacturers, subsequently enhancing their overall profit marginsThis alleviation of financial strain places companies in a position where they can execute production schedules more effectively, increase production investments, and augment output levels, empowering a more competitive stance in the market.

The aforementioned trends illustrate the precarious nature of the PVC and chemical marketsPrice volatility within these sectors is influenced by multiple factors, including shifts in demand, fluctuations in raw material prices, regulatory adjustments, and intensifying competitionProducers must stay vigilant in monitoring market trends and adjusting production strategies accordingly to maintain a competitive edgeFor integrated chlorine-alkali and PVC companies, fostering collaborative growth throughout the supply chain becomes vital to enhancing operational efficiency and product quality, thereby securing a favorable market position.

At a macro level, the reported shifts in profit margins serve not only as indicators of individual companies' performances but also shed light on broader trends within the chemical sectorIn response to the evolving market landscape, it is crucial for chemical enterprises to bolster their management and innovation initiatives to navigate challenges effectively and pursue sustainable growth.

As seasonal weather impacts construction activities in northern regions, with colder temperatures typically causing a slowdown in real estate and building projects, the PVC industry faces a paradox

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