Market speculation: future pattern and volatility trend
6, July is the peak season for crude oil consumption. At the same time, China has also entered the stage of shed film production and stocking. Due to the dull demand in the downstream this year, most shed film factories have no intention to start construction in advance. At the same time, petrochemical stocks and port stocks are still at High position. After entering August, subject to 'de-leverage' and import pressure, the plastics market has the possibility of a callback.
After entering September, under the traction of 'Golden September and Silver 10', the plastics market will be transferred to the peak season of consumption and will continue until December. On the one hand, after the fall, the temperature will gradually drop, and the demand for membranes will rebound, which will drive the price of PE; In respect, 10, November is usually a small off-season in the peak season. In recent years, with the promotion of 'Double Eleven', online shopping express has developed at a high speed, and the demand for packaging film has grown steadily. LLDPE will continue to rebound.
In the global polyethylene production increase cycle, by the beginning of 2019, with the resumption of production in the early stage, the import of raw materials rebounded, and the pressure on the supply side reappeared. In January and February, it was generally around the Spring Festival, most factories were on holiday, and the output fell to a low point. By then, the plastics market will also fall back.
First, the market review
This month, the domestic PE market fluctuated widely. As the overhaul peak has passed, the refinery equipment has been restarted, and the linear start-up has rebounded accordingly. Due to the demand for replenishment, LL once oscillated upward. In mid-term, some petrochemicals tried to raise the offer, but the terminal As the import pressure rebounded, plastics futures rallied. On June 15, the second round of Sino-US trade war started, and international oil prices fell sharply. Due to the loss of upstream support, domestic petrochemical companies sold more and more, LL was hit hard. It fell below the 8900 yuan mark and hit a new low in the year. At the end of the month, the import tariffs on polyethylene and plastic products were lowered. At the same time, LLDPE rebounded and rebounded due to the strengthening of the oil market.
'Figure 1 Plastic Index Daily Line'
Source: Wenhua Finance, China United Futures R&D Department
Second, the cause analysis
(a), from a macro perspective
In terms of currency direction, the Western world led by the United States has entered a rate hike cycle. The monetary policy of the world's major central banks is tightening. On June 13, the Fed resumed interest rate hikes as scheduled, and the benchmark interest rate rose to 1.75-2%. The interest rate will be raised twice during the year. After the domestic GDP is expected to rise, the dollar will have an intrinsic basis for strengthening again.
On June 15, the United States announced a 25% import tariff on China's $50 billion worth of goods. However, the decision to impose tariffs on chemicals such as polyethylene will be announced separately. At present, the Sino-US trade war is on domestic gathering. The impact of the ethylene market is limited; on the contrary, for US polyethylene suppliers, some US sources will be difficult to enter the country, and their market share will be seriously affected.
This year, China's overall currency performance is neutral. At present, the domestic economy is weak, and the Chinese and American currencies are divided: After the Fed raised interest rates in June, the central bank chose to lower the RRR again. In the first half of the year, in the context of 'de-leverage', social financing Channel tightening, corporate financing costs are higher. If this policy continues to advance, it will not be conducive to polyethylene stocking and speculative demand. So, the plastics market will not be too good in the second half.
From the US crude oil market, the latest offer is 73.67 US dollars / barrel. The recent big increase has two factors: 1, because the United States threatens allies to stop importing crude oil from Iran, the market is also worried about Canada, Libya's production capacity decline. 2, according to EIA latest The data shows that due to the increase in refinery capacity utilization, US crude oil inventories fell by nearly 10 million barrels, the largest decline in the past two years.
However, there are two disadvantages: Saudi Arabia plans to expand crude oil production to 11 million barrels per day in July, up from 10.8 million barrels per day in June. 2, now, global trade frictions are on the rise, anxiety may increase International oil market shocks.
At present, the macro-surface is intertwined. However, with the arrival of the peak of the US driving, crude oil consumption will also enter the peak season. The oil market after the callback is entering the upward channel, which is expected to usher in a phased rise. Therefore, its strong trend will Strong support for the plastics market.
(two), from the change in inventory
According to the usual practice, domestic PE stocks will accumulate rapidly during the winter and spring, and will be at the high level throughout the year. This is due to the stocking of spring production. However, during the peak season of the agricultural film season, concentrated purchases have not been released, and the market is not shipped. Chang. Although there are replenishment in the downstream, this only makes the stock transfer, rather than being digested by demand. Therefore, the traditional 'Golden Three Silver Four' does not welcome 'production and sales booming'.
The second quarter is usually the off-season of demand, and it is also the peak of petrochemical maintenance. I thought that equipment maintenance and parking can alleviate the pressure on the supply side; however, due to the considerable amount of upstream import profits, foreign sources of supply have a backlog in the port. The progress of the library slowed down, and the stocks of traders rose. It can be seen that the inventory was only transferred from the upstream to the middle, resulting in 'descent inventory recession'.
As shown in Figure 1. As of June 29, domestic petrochemical stocks were 660,000 tons, which was 30,000 tons less than that before the Dragon Boat Festival; the chain fell sharply by 13.6% last week. Due to the slow follow-up of downstream consumption, In order to promote inventory digestion, the upstream has to cut prices to sell. At the end of the month, due to the need to complete the assessment, the midstream traders are more profitable to ship. 'Destocking' is accelerated.
At present, port inventories are close to historical highs and are still rising. Last week, polyethylene port stocks were 454,000 tons, an increase of 39,600 tons from the previous week. Recently, low-pressure, linear and other sources of goods were concentrated in Hong Kong. The upstream is eager to 'go inventory', The downstream demand is dull, causing the cargo to stay and the port inventory to rise. Entering July, due to the reduction of the tariff on polyethylene, the import volume of the market may continue to grow.
Therefore, in the case of high petrochemical and port inventory, the plastics market is difficult to perform well.
'Figure 2 domestic petrochemical inventory'
Source: Zhuo Chuang Information Guolian Futures R&D Department
(3), from the trend of price difference
Up to now, major sales areas have significantly lowered the spot price: North China LLDPE quoted at 9170-9350 yuan / ton, East China LLDPE quoted at 9150-9300 yuan / ton, South China LLDPE quoted at 9200-9300 yuan / ton.
As shown in Figure 3. Since March, linear futures have fallen more than the spot, and they have continued to be water-adjusted. Affected by high import profits, a large amount of polyethylene has arrived in Hong Kong. Some petrochemical companies have tried to price, but due to slow digestion of stocks, terminals Demand was dull, LLDPE spot price weakened. In the second quarter, petrochemical overhaul increased, and LLDPE started to fall to a low point. Linearity rebounded and the basis dropped.
On the other hand, the oil price has risen sharply recently, which has formed a strong support for the downstream plastics market. The LL futures rebounded at the end of the peak season. At present, the North China 7042 market price-main contract has dropped to 85 yuan/ton. Narrow, the market can rise!
'Figure 3 LLDPE price and basis trend'
Source: Wind Guolian Futures R&D Department
As shown in Figure 4. It can be seen that the recent contract price is higher than the forward contract price and shows a decreasing monthly trend. Therefore, LLDPE is a typical reverse market. The reason why LL far-month contract is discounted, mainly Because: At present, the world is in the big cycle of increasing production of polyethylene! From the domestic point of view, this year's film season has not been fulfilled as scheduled. Near the third quarter, as the import expectation rebounds, the supply pressure is stronger. But the traditional greenhouse film season 4. The contradiction between supply and demand will be slightly eased, and the price will be supported.
'Figure 4 plastic near the far month contract price comparison'
Source: Wind Guolian Futures R&D Department
(4), from the supply environment
From the upstream point of view, the current total operating rate of PE equipment in the country is 86.85%, and the proportion of LLDPE production is 32.88%. In terms of equipment maintenance, the petrochemical maintenance in the second half of the year is usually less than that in the first half of the year. This year is also the case: From the perspective of production planning, In the second half of this year, new installations were limited, and production time has been generally postponed to the beginning of 2019.
In addition, since December last year, with the strengthening of environmental protection, the cumulative import volume of imported materials is only 20,900 tons. The import of the market will continue to be limited. At the same time, the supply of domestic waste plastics has decreased significantly. Therefore, this has increased to some extent. The demand for new materials abroad.
From the first half of the year, the LLDPE import arrivals have increased significantly. This is the main reason for the higher supply pressure. After the second half of the year, the new pressure may come from North America. It is understood that the US market is steadily starting in July, the upstream device is driving. After that, it is expected to start production. It is expected that the new capacity in North America will begin to affect the market as early as July-August. Therefore, the import pressure will continue to rise in the later period.
Looking back on 2017, the United States exports about 155,000 tons of high-pressure polyethylene to China, and China's high-pressure imports account for 6% of the month; most of them are ordinary film materials, and a few are special materials, mainly for general trade. At present, domestic LDPE inventory is high. The price is weak. The mainstream price of high-pressure goods in the United States is 9,200 yuan / ton. The market is enthusiastic about its purchase. Therefore, the market can be supplemented by sources such as South Korea and the Middle East.
Looking at the Middle East market, ethane, which is one of the natural gas raw materials, will crack twice as much as the naphtha process if it is cracked to produce ethylene. In the future, with the improvement of this cracking technology, the Asia-Pacific region (including China) The raw material import structure will change, and the ethylene price will also be greatly affected.
(5), from the perspective of demand
The second quarter is usually the low season of plastic film. Therefore, the purchase of plastics has also declined. Since 2018, due to the late New Year and the difficulty of recruitment, the concentrated production period of the film has been extended, and the downstream demand is released later than in previous years. After entering April, Although cotton planting was carried out in Xinjiang and other places, the demand for mulch film rebounded once; however, due to the tightness of their own funds, most farmers abandoned the mulch crops. The market has thus seen a 'peak season is not prosperous'.
Take the agricultural film industry as an example. Last week, the operating rate of agricultural film increased by 2 percentage points to 19%, still at a low point. Since March 2017, the prices of crops in various regions of the country have generally fallen. Although the price of agricultural film is not changed from last year. Large, but the production costs increase, and continue to reduce the planting profits, resulting in low enthusiasm for farmers to grow. Therefore, the reduction of planting profits is an important reason for the use of membrane reduction.
In recent years, changes in the yield of crops are affecting the direction of farmers' cultivation, and also directly affect the film demand in some areas. This also led to a slight decline in film orders compared with the same period last year.
In the third quarter, the demand side is expected to end the weak state. From June to July, the film production started. After entering August, the downstream purchase volume will be enlarged, the film market will gradually pick up, and the production and sales season will be ushered in from September to December. The plastics market will have a seasonal rebound.
In terms of speculative demand, considering that 'de-leverage' will continue to advance, it is expected that social financing will remain tight in the second half of the year. For SMEs, financing costs will also increase. Therefore, this is for stocking or speculation of polyethylene. Demand is unfavorable.
Third, summary and outlook
Based on the above discussion, the following three stages will be used to infer future evolution:
6, July is the peak season for crude oil consumption. At the same time, China has also entered the stage of shed film production and stocking. Due to the dull downstream demand this year, most shed film factories have no intention to start construction in advance. At the same time, petrochemical stocks and port stocks are still at High position. In a short period of time, stocks only shifted, but they were not really digested. It can be seen that downstream demand is not good and it is difficult to stimulate consumption. Despite the support of the upstream market, after entering August, it is subject to 'de-leverage'. As well as import pressure, the plastics market has the possibility of a callback.
After entering September, under the traction of 'Golden September and Silver 10', the plastics market will be transferred to the peak season of consumption and will continue until December. On the one hand, after the fall, the temperature will gradually drop, and the demand for membranes will rebound, which will drive the price of PE; In respect, 10, November is usually a small off-season in the peak season. In recent years, with the promotion of 'Double Eleven', online shopping express has developed at a high speed, and the demand for packaging film has grown steadily. LLDPE will continue to rebound.
In the global polyethylene production increase cycle, by the beginning of 2019, with the resumption of production in the early stage, the import of raw materials rebounded, and the pressure on the supply side reappeared. In January and February, generally around the Spring Festival, most factories were on holiday and the output fell to a low point. By then, the plastics market will also fall back.
'Figure 5: Plastic Index (weekly) trend concept map'
Source: Wenhua Finance, China United Futures R&D Department