The reason for the price fluctuation of PVC drainage pipes: analysis of the impact of raw materials and market supply and demand

When buying building materials for decoration, many people will wonder: "Why did the price of the PVC drain pipe change this month after looking at it last month?" In fact, the price fluctuation of PVC drain pipe is not random, and there is a double logic of raw material cost and market supply and demand behind it. Today we will take it apart and see how these factors "influence" the price. First, the raw material is the "foundation" of the price of PVC drain pipe - PVC resin accounts for more than 70% of the cost of the finished product, and its price fluctuation is directly transmitted to the end point. The price of PVC resin is affected by two "upstream" factors: one is oil, because the core raw material of PVC resin ethylene comes from oil, once the international oil price soars (for example, during the Russian-Ukrainian conflict in 2022, Brent crude oil rose from $80 to $120), the cost of ethylene will follow, and the price of PVC resin can rise by 30% in just one month; the second is the chlor-alkali industry, another raw material of PVC is vinyl chloride, and vinyl chloride needs chlorine and ethylene, and the supply of chlorine is bound to caustic soda (the chlor-alkali plant produces 1 ton of caustic soda, which will produce 0.88 tons of chlorine at the same time) - if the demand for caustic soda suddenly drops, there may be excess chlorine, resulting in a reduction in vinyl chloride production, There are also environmental protection policies. For example, under the "double carbon" target in 2021, many energy-intensive PVC production plants will be eliminated, the supply of resin will be reduced, and the price will "rise". In addition to raw materials, market supply and demand are the "baton" of prices. Downstream demand side, the core is real estate - new house decoration, second-hand house renovation all use PVC drainage pipes, real estate investment growth from 4.4% in 2021 to -5.2% in 2023, PVC pipe demand directly reduced by 15%, prices followed by a drop of 10%; followed by infrastructure, such as urban "rain and sewage diversion" project, new rural toilet renovation, these projects are "batch demand", a central province in 2023 launched the "pipe network transformation three-year plan", all of a sudden to purchase 500,000 meters of PVC drainage pipes, short-term demand surge, prices directly increased by 8%. There are also seasonal factors. Before the rainy season in the south (March-May), many projects rush to complete the pipeline laying before the rain, and the demand will explode, and the price will rise in the short term; while in the winter in the north (November-February), the construction site will be shut down, the demand will drop sharply, and the price will fall again. Looking at the supply side, the changes in the production capacity of enterprises will also "stir" the price. For example, in the past few years, many enterprises have seen the profit of PVC pipes and have expanded their production capacity. In 2022, the national PVC pipe production capacity will increase by 20% compared with 2019, and the supply will be oversupplied, causing the price to fall by 12%. However, if the raw materials rise too much, small enterprises will not be able to bear the cost, and There is also competition - small and medium-sized enterprises may fight price wars in order to grab orders, but if the cost of raw materials rises to "swallow" profits, these enterprises can only withdraw, the market supply decreases, and the price will return to a reasonable range. In fact, the price fluctuation of PVC drainage pipes is essentially a dynamic balance between "raw material costs" and "market supply and demand". For decoration owners, you can pay attention to the signals of oil prices and real estate policies and buy materials in advance; for merchants, you need to keep an eye on resin prices and downstream demand and adjust inventory. In the end, understand the logic behind it, so that you can "have a bottom line" in the price fluctuation.