South China’s PVC demand soft on downstream power cuts

22 July 2011 11:03  [Source: ICIS news]

SHANGHAI (ICIS)--China’s polyvinyl chloride (PVC) demand in Guangdong province remains weak in July owing to ongoing cuts in domestic power supply, with demand expected to improve only from September when the peak summer season comes to a close, local industry sources said on Friday.

China experiences a peak in power demand from June to August every year, with electricity supply only stabilising from September onwards, said an industry source.

The country’s PVC industry has been facing downward pressure since June, with downstream sectors such as film, cable, plastic pipes and shoe producers being affected.

Many PVC downstream producers in Guangdong’s Foshan city usually cut their electricity usage and operate their plants at reduced capacity for two to four days every week during the summer. This is in line with government restrictions as the province typically experiences power shortages every year around this period, said a source from Foshan Aolindeke, a PVC profile producer.

“[Any company that] does not obey the authorities’ power-cut policy will have its power cut for 10 days, or face a fine of yuan (CNY) 100,000 ($15,503),” added the source.

“Companies located in Dongguan, especially in industry-intensive areas, have to cut their power for two days weekly,” said a general manager from Dongguan Liaobu, a PVC shoe producer.

Most PVC producers in Shenzhen have received notice from the government to cut their power for three days per week on weekdays. As a result, affected companies usually operate during the weekends, added Shenzhen Wanfu, another PVC shoe producer.

PVC plants in the south China market are currently being run at average rates of 50-70%.

($1= CNY6.45)

Additional reporting by Dolly Wu

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By: Besty Zhou
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