The supply and demand pressure of domestic PVC in 2023 is far less than that of PP

At the micro level, as far as the fundamentals of PVC are concerned, the dominant inventory is still accumulating. After the holiday, the possibility of further breaking the millions is not ruled out. With such a large inventory, the price will rise like a bull. Once the macro expectation is fulfilled and the inventory is reduced to less than the expectation, there will be greater risk to catch up. Secondly, in terms of macro drive, we can learn from 2020. The first half of the 2020-2021 commodity bull market will be started by domestic economic recovery, and the second half will be driven by overseas economic recovery relay, with internal and external cooperation. However, the market of PVC and some bulk industrial products this year may be driven more by "internal circulation", and overseas factors may even become a drag, so it is difficult to expect too much of its rebound height, and each integer level above 7000 will be an important resistance level. The sustainability of the rise of PVC and some bulk industrial products still needs to be confirmed by the repair of more economic and real estate data.

Because many anticipatory things cannot be falsified or verified, the PVC unilateral operation is relatively faced with strong uncertainty and greater risks. If you want to pursue a more stable operation, the repair of the price difference between PVC and PP may be a relatively less risky arbitrage operation this year. PVC is better than PP in terms of both financial attributes and oversold attributes, and macro bull speculation will also choose PVC more than PP. In terms of fundamentals, the supply and demand pressure of PVC in 2023 is far less than that of PP, and the new devices that PVC is expected to invest in the whole year are basically Wanhua (Fujian) Phase I, Jintai and Zhenyang in Shaanxi Province, and the new capacity is expected to be only 1.3 million tons, while the number of devices to be invested in PP2023 is 11.3 million tons, and the investment pressure is far from PVC. Under the large refining cycle, it is difficult to have too much expectation on the upward space of PP. It is expected that under the influence of weak expectation and high supply, the upward drive and space of PP05 and 09 contracts are limited, and they are still the varieties with relatively empty distribution in chemical products. Therefore, in the current stage of overall macro expectations, PP can be configured as a good short variety for inter-variety arbitrage. As far as the PP-PVC price difference is concerned, once given the position of 1800-2000, it is a good entry point to narrow the price difference for arbitrage.

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