Surge in Upstream Pre-sales vs. Sluggish Trader Shipments | China PVC Market Rally

Last week, PVC spot prices surged sharply, tracking the upward momentum of the futures market. Taking last Friday's closing prices as the benchmark, price hikes were seen across multiple producers. PVC futures climbed from 4,578 yuan/tonne to 5,128 yuan/tonne. Specifically, Xinfa raised its offer by 500 yuan/tonne (from 4,400 to 4,900 yuan/tonne), Dongfang Haipingmian lifted prices by 460 yuan/tonne (from 4,220 to 4,680 yuan/tonne), and Lutai Chemical posted a 340 yuan/tonne increase (from 4,590 to 4,930 yuan/tonne).

Upstream Pre-sales Surge, Yet Trader Shipments Stay Sluggish

While upstream manufacturers saw substantial gains in contract prices and traders showed strong interest in restocking — Longzhong Information reported a week-on-week rise of 255,400 tonnes (33.70%) in upstream pre-sales volumes — trader-side spot sales remained muted. Longzhong's trader sample data indicated that East China's typical daily sales volume exceeds 10,000 tonnes, yet only 3,680 tonnes were transacted on Wednesday and 5,410 tonnes on Thursday. Trading activity stayed sluggish, as most major downstream buyers had already built inventories during the market dip in the prior week. Furthermore, amid year-on-year declines in current order volumes and fundamental oversupply of standard PVC grades, buyers remain cautious about the price rally. They have adopted a wait-and-see stance and only purchase to cover immediate requirements.

Improving Spot Fundamentals Provide Underlying Support

PVC spot fundamentals improved last week. PVC producers' operating capacity utilisation edged up merely 0.08% to 68.30%, representing an 8.83% year-on-year drop. Social inventories fell 2.81% week-on-week to 1.1234 million tonnes, and factory inventories dropped 8.62% to 0.2523 million tonnes; industry-wide inventories have continued to decline since April. Pre-sales volumes hit 1.0132 million tonnes, rising by 0.2554 million tonnes or 33.70% week-on-week. Meanwhile, downstream operating rates increased by 1.10% to 40.46%. Overall, improving fundamentals provided underlying support for price gains.

Coal Sector: The Key Catalyst Behind the Rally

The key driver behind the recent sharp PVC price rally stems from the coal sector, where supply contraction has created a semi-coke (blue charcoal) shortage. Earlier coal price increases have rippled down the supply chain: as coal costs rose, power plants incurred cost-driven losses and reduced power output. Consequently, power rationing was implemented in the western Inner Mongolia power grid in August, which constrained calcium carbide supply.

The marked upward shift in coal price benchmarks and supply tightening were largely triggered by mandatory government safety inspections after gas accidents in Shaanxi, including the incident on 22 May 2026, which enforced strict supply curbs. Major producing regions — Shanxi, Shaanxi and Inner Mongolia — launched comprehensive inspections targeting hidden mine hazards and deployed on-site inspectors at coal mines. The immediate fallout was the suspension of operations at 186 coal mines in Shanxi, with a combined capacity of 253 million tonnes. Many small and medium-sized private mines in these regions voluntarily cut runs or halted production for self-inspection, while mines generally reduced operating loads. This rigid contraction in marketable coal supply became the critical catalyst accelerating coal price inflation.

Supply Chain Bottlenecks in Semi-Coke and Calcium Carbide

Supply chain bottlenecks have pushed coal prices higher and tightened availability. This, in turn, strained semi-coke (blue charcoal) supply and prompted aggressive semi-coke price hikes. In the calcium carbide segment, low inventories at some plants have created a dilemma: plants face semi-coke shortages that weigh on operating rates and soaring semi-coke feedstock costs. However, their ability to pass on costs via higher calcium carbide prices has been insufficient to offset expenses, leading to loss-induced production cuts. Therefore, future supply balances of semi-coke and calcium carbide will shape operating rates for calcium-carbide-based PVC.

Ethylene and Downstream Considerations

Separately, crude oil market developments, notably shipping disruptions in the Strait of Hormuz, directly drive ethylene price trends, which in turn influence the cost and supply dynamics of ethylene-based PVC routes.

Outlook

In the short term, prices are supported at low levels by the combined effects of tightening coal supplies and firm ethylene prices, with the upside potential largely dependent on raw material trends. However, with trader-side trading activity sluggish and downstream buyers adopting a wait-and-see stance amid year-on-year order declines and structural oversupply of standard grades, the sustainability of the rally remains uncertain. Buyers are advised to monitor upstream pre-sales, social inventories and feedstock cost movements closely.

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Disclaimer: This market analysis is published for industry reference only. It does not constitute a sales quotation or investment advice. Figures and views reflect the information available at the time of writing.