Affected by the bearish sentiment, the price of plastic futures fell sharply in the near future. However, considering that the device is entering the maintenance season, the price will stop rising in the later period.
Demand performance was weaker than expected. Plastics futures prices began to decline in mid-January. During this process, traders and downstream companies failed to honor expectations for post-Spring Festival stock-supply, and prices fell faster. Technically, Monday fell for six months. The lower edge of the oscillation interval, but it was taken back on Wednesday.
Downstream buy-to-use
Usually, the film factory prepares for the film sales season next year, and will stock up before the Spring Festival. However, this year, the price of plastics continues to show a downward trend. Under the state of buying and not buying, the willingness of downstream companies to stockpile is not high, and the stocking quantity is limited. The market generally believes that the inventory of downstream companies is low. When the Spring Festival holiday ends, the demand will be released under the stimulation of just purchasing. However, after the Spring Festival, due to abundant supply, the overall price will remain weak, and the downstream companies are in no rush to get the goods. Take more out of the box strategies.
From an upstream perspective, during the Spring Festival period, the load of PE enterprises started to remain high, and during the same period, a large area of downstream downtime resulted in the accumulation of PE stocks. As a result, PE destocking pressure increased after the Spring Festival. The company hopes to reduce its price through walking. The effect of buying or not buying or falling attitude was not positive, which led to the light trading of the plastic spot market and the sharp drop in the price.
Supply and demand structure is expected to improve
Although the current market sees a hollow state, the possibility of further deterioration of the plastics fundamentals is not likely.
First, from the perspective of supply, in the month of April, the polyolefin plant will enter the maintenance season. Due to poor market performance this year, the company's production enthusiasm is not high, and maintenance efforts will be higher than in previous years, and market supply will be reduced accordingly.
Second, from the demand side, the high season of mulching film will come. Downstream companies will inevitably increase the amount of raw materials purchased. Supply will decrease, demand will increase, and inventory will gradually decline. The bargaining power of petrochemical companies will increase.
At present, the fundamental reason behind the poor performance of the downstream market is still the pessimistic attitude, and with the reduction of supply and the release of demand, the market mentality will change.
Market Forecast
In summary, the pressure on plastics destocking in the upstream reservoir during the Spring Festival has increased, and pessimistic sentiment has contributed to the fact that downstream stocking is not active and the market is not booming during the peak season. This is the root cause of the recent weak plastic trend. However, As the maintenance season approaches, the start-up load of the polyolefin plant will decline, and supply pressure is expected to ease. On the whole, the basic orientation is good, plastic prices may stop rising, and investors are advised to buy more long-term medium-term and long-term orders.