PVC flooring is made of polyvinyl chloride (PVC) as the main raw material, with auxiliary materials such as heavy calcium powder, plasticizer, stabilizer, etc., produced by calendering or extrusion process, commonly known as plastic flooring.
PVC flooring has the advantages of environmental protection, recyclability, easy installation, wear resistance, moisture resistance, anti-slip, waterproof and fire retardant.
The future growth rate of demand for PVC flooring in China may come from the increase in domestic demand in China. With the development of China's domestic real estate industry and the increasing preference for the use of PVC flooring in the home improvement market. It is possible to accelerate the replacement of solid wood flooring and carpets by PVC flooring and increase the market share of PVC flooring in China. In terms of external demand, PVC flooring is mainly exported to the United States.
Due to the cooling of the US real estate market and tariff issues, the growth rate of China's PVC flooring exports to the United States has slowed down or continued to decline.
According to Zhiyan Consulting statistics, the proportion of external demand for PVC flooring in 2020-2022 was 65%, 55%, and 51% respectively, and the proportion of external demand has decreased.
In 2022, China's exports of PVC flooring to the United States accounted for 50% of China's PVC flooring exports. It can be simply defined that China's exports to the United States accounted for about 25% of China's PVC flooring demand. We made the following assumptions. Assumption 1: In 2023, the domestic demand for PVC flooring will increase by 5%, the export demand will increase by 0%, and the export will remain the same as in 2022, then the growth rate of PVC flooring will be about 2.27%.
Assumption 2: In 2023, the domestic demand for PVC flooring will increase by 10%, the export demand will increase by 0%, and the export will remain the same as in 2022, then the growth rate of PVC flooring will be about 4.71%.
Assumption 3: In 2023, the domestic demand for PVC flooring will increase by 5%, the export demand will increase by -5%, then the growth rate of PVC flooring will be about -0.29%, that is, the growth rate of PVC flooring in 2023 will be basically the same.
Assumption 4: In 2023, the domestic demand for PVC flooring will increase by 10%, the export demand will increase by -5%, then the growth rate of PVC flooring will be about 2.15%. Conservative estimates show that the probability of scenario three is high, and optimistic estimates show that the probability of scenario four is high. Therefore, in 2023, PVC flooring needs to pay attention to the domestic demand side. Domestic demand will boost PVC flooring, and the proportion of foreign demand may continue to decline. Investment advice: PVC will maintain a volatile outlook in the short term. Buy on dips in the 05 contract. Try to buy near 6,200-6,300 yuan/ton. Risk warning: Macro risks, demand below expectations.
