Polyolefins: There are signs of resumption of navigation in the Red Sea, the impact of the shutdown of certain units is limited, and the upward drive of the market is weakened

Polyolefins: There are signs of resumption of navigation in the Red Sea, the impact of the shutdown of certain units is limited, and the upward drive of the market is weakened

A.P. Muller-Maersk, the world's second-largest container shipping company, said it was preparing to resume Red Sea shipping thanks to a new multinational maritime task force that will protect ships from Yemen's Houthi attacks. Earlier this month, the company suspended shipping in the Red Sea due to an attack on the vessel. Maersk said that as of December 24, they had received confirmation that Operation Prosperity Guardian (OPG), part of the previously announced multinational security initiative, has now been established and deployed to allow maritime trade through the Red Sea/Gulf of Aden and to use the Suez Canal again as a gateway between Asia and Europe, and that they are preparing to allow ships to resume eastward and westward navigation through the Red Sea as the operation is implemented. Maersk said it would announce more details in the coming days. However, the company said that depending on the change in the safety situation, measures to divert ship traffic may be taken again.

International oil prices rose strongly last week, with WTI rising 3.77% and Brent rising 4.46%. Among them, the important reason for the rise of crude oil is the event-driven, that is, the Houthis have led to the continuous fermentation of the Red Sea issue, some oil tankers have temporarily chosen to detour transportation, and geopolitical risk concerns have increased. However, the overall supply and demand side of crude oil has not improved significantly, and it is still unknown whether Angola's withdrawal from OPEC will be fully traded. On December 25, the Christmas holiday in Europe and the United States, the external crude oil market was closed. Pay attention to whether there is a sentiment premium repair in crude oil after the holiday.

In addition, due to special reasons on the 23rd, Qilu Petrochemical's 70,000 tons/year PP unit and 650,000 tons of polyethylene (14LD, 14HD, 37 full density) were stopped, and the operating time was undecided. Affected by this, the market speculation sentiment was high over the weekend, and the Qilu high-pressure offer rose by 150-200 yuan/ton, and the main L and PP contracts opened straight up on Monday. As far as the supply of the spot market is concerned, due to the relatively small production capacity of Qilu Petrochemical and the majority of special materials for products produced in recent years, the impact on the general material product market is expected to be limited, while the corresponding cable materials and rolling plastics, such as J182A, 7149U and 7151U, will form a significant boost in the local market trend.

However, returning to the current polyolefin fundamentals, although there is a temporary shutdown and good support at the end of the month, the positive drivers brought by the policy and cost side in the early stage will be effected by interest rate cuts or weakened expectations crude oil, and it will be insufficient that the market continue to drive upward.

In terms of the market outlook, the new parking devices in polyolefin at the end of the month and the beginning of the month are limited, and with the resumption of work of pre-maintenance enterprises, the overall supply of goods in the market has increased. However, the end of the month is approaching, and the sales tasks of contract households this month are mostly completed ahead of schedule, and the tightening of marketable resources will hedge the supply increase caused by the decline in market losses in the short term. On the demand side, it is difficult to increase new orders in major downstream industries and is gradually slowing down, and the demand for raw materials is slowly weakening.

However, at present, the price of raw materials has moved steadily upward, and there is no obvious high price resistance in the downstream. At the beginning of this week, the ex-factory price of PetroChina was raised by about 50-100 yuan/ton, and the supply cost support was strong. On the whole, the current polyolefin market is long and short, and the market support is still relatively strong, but the upward drive continues to weaken. Therefore, it is expected that the short-term domestic polyolefin market will be mainly volatile and strong, but there is limited room for continued upward exploration, and we will pay attention to the changes in crude oil and the trend of futures.