Polypropylene: Short-term upswing | Will the market continue to bearish?

Recently, the polypropylene futures market has started to rebound, and the spot price has moved up. The downstream manufacturers are mainly medium and low in stocks, and the replenishment is on the verge; coupled with the slowdown in petrochemical prices and the favorable cost of grease PP, the polypropylene market has begun to move slightly. Rising, but the profits of downstream manufacturers were squeezed, and procurement was not active. For a short time, the PP market was still dominated by low-end operations.

Supply and demand pattern

In November, the polypropylene maintenance equipment was greatly reduced. Pucheng cleaned an annual output of 400,000 tons of equipment, Qingyang Petrochemical's annual output of 100,000 tons of equipment and Donghua's annual output of 400,000 tons of equipment will be driven one after another, while imported materials are relatively concentrated. According to statistics, in September 2018, China's total imports of polypropylene was 431,000 tons, an increase of 31,000 tons, a growth rate of 7.75%, an increase of 30,000 tons compared with the same period of last year, a growth rate of 7.48. From the perspective of downstream demand, in the plastic knitting market, due to the lower operating rate of downstream cement and sand industry, the demand for PP plastic knitting is tight; the film material market is basically stable, and the pressure on BOPP film and CPP film in some regions is declining. Most manufacturers are cautiously watching. However, due to seasonal factors, the PP pipe material market has led to an unprecedented tightening of demand. In the later stage, upstream production has increased, downstream demand has been slow, and supply and demand pressure in the polypropylene market has become more prominent. The market may once again lead to a downswing.

Upstream dynamics

The international crude oil market fell for four consecutive weeks. US sanctions against Iran weakened. The market for crude oil supply was abundant and the price was low. The upstream propylene market fell sharply. It is reported that the price of Shandong propylene market fell by 1,400 yuan/ton on the 10th, a drop of nearly 13.79%. After November, Vantone Chemical, Haike Old Plant, Shengli Petrochemical, Zhenghe Petrochemical, Fuyu Chemical, Shenchi Old Plant and many other refineries will resume driving, propylene production is expected to increase by 800 tons / day, and the port to the ship Most of them will bring negative effects to the propylene market. In the short term, the downstream replenishment will be raised, and the pressure in the middle and lower reaches will increase.

In summary, the current spot of polypropylene is boosted by the futures market, but the upstream raw materials are running low, and the upside is limited. Later, it will be under pressure from supply and demand, and demand is shrinking.