Polypropylene Weekly Report: Falling First and Then Rebounding During the Week, the Overall Fluctuation Space is Limited

Polypropylene Weekly Report: Falling First and Then Rebounding During the Week, the Overall Fluctuation Space is Limited

Key views in this week:

This week, the domestic polypropylene market fell first and then rebounded, and the overall fluctuation space was limited. In terms of price, as of this Thursday, the mainstream price of domestic wire drawing ranged from 7430-7600 yuan/ton, a slight change of 20-30 yuan/ton from last week. From the perspective of the market outlook: On the cost side: after the international oil price has experienced a short-term continuous decline, the deepening of production cuts in the later stage is still a high probability event, and the focus will be on the OPEC+ Meeting in the later stage, and the medium-term crude oil will still maintain a range-bound operation. In December, the temperature is still expected to drop, the demand for civil using electricity will increase, the daily consumption of downstream power plants will increase, and the process of coal inventory destocking will be accelerated; On the supply side: Chambroad Second Line (400,000 tons/year) and Ningbo Jinfa First Line (400,000 tons/year) plan to stop for maintenance next week, but Yanshan Second Line, Dushanzi Third Line, Zhongyuan Second Line, Dalian First Line and other maintenance enterprises at the early stage have resumed work one after another. In addition, the supply side of the market expanded production intensively in December, and the pressure on PP supply still existed. On the demand side, it is difficult to increase new orders in major downstream industries and they even show a gradual slowdown trend, and the demand for raw materials is weakening. From the perspective of speculative demand, the current midstream inventory is still not high, and the short-term planning would choose whether to build warehouses according to the rise and fall of the market, and pay attention to the  rebound situation of the market; On the inventory side: According to the inventory trend in previous years, in view of the current petrochemical’s grasp of market demand and effective planning of production arrangements, it is expected that these two kinds of oil inventories will continue to operate at a low level at the beginning of the month, and the role of supporting the market will continue to exert force. To sum up, it is expected that the domestic PP market will be dominated by fluctuation next week.

Chapter 1  Polypropylene Market Review of This Week

1. Analysis of the domestic market trend of polypropylene

Unit: Yuan/Ton

This week, the domestic polypropylene market fell first and then rebounded, and the overall fluctuation space was limited. In terms of price, as of this Thursday, the mainstream price of domestic wire drawing ranged from 7430-7600 yuan/ton, a slight change of 20-30 yuan/ton from last week. During the week, the maintenance of petrochemical devices increased significantly, including Dongguan Juzhengyuan Phase I, Zhongyuan Petrochemical Second Line, Dushanzi Petrochemical Second Line and Third Line, Dalian Petrochemical First Line and others were shut down for maintenance, and the supply of polypropylene in the domestic market shrank this week. However, the downstream demand performance is not excellent, most of them are mainly purchased for meeting the rigid need, and at the circumstance of  the falling price in the early stage, the terminal end is cautious to enter the market, and the speed of goods trading in the market is not fast. Since the beginning of the week, PP futures have fluctuated and fallen, and the market atmosphere is hardly optimistic. Middlemen actively made less profits to achieve goods transaction, and the market price fell slightly. In terms of petrochemicals, ex-factory prices have been partially reduced, and the cost of on-site goods has decreased. However, as the end of the month approaches, the on-site spot resources for sale have tightened. And on Thursday, the market stopped falling and rebounded, easing the pessimism in the market, and the low-end spot price increased slightly, accompanied by some finished real orders.

Figure 1  Polypropylene index chart

2. Analysis of the USD market trend of polypropylene

This week, the domestic USD PP market price continued to fall: as of Thursday, the USD market wire drawing was offered at 870 US dollars / ton, down 20-30 US dollars / ton, the PP price was around 950-990 US dollars / ton, and the high-end price fell by 10 US dollars / ton. At present, the price of PP in the domestic market fluctuates and falls, but some importers follow suitably. The performance of follow-up order buying is weak, and the market transaction is negotiable.

Table 2 Price Changes in the USD market of polypropylene

Unit: USD/Ton

3. Analysis of polypropylene futures market trend

This week, the PP2401 runs in the contract range. On November 24, the PP2401 contract opened at 7418, with a weekly high point of 7487 and a low point of 7373, and closed at 7476 on Thursday. Judging from the transaction status on Thursday: the transaction buying position increased by 21%, and selling position increased by 19.5%, and transaction selling position decreased by 23.5%, and buying position decreased by 24.8%. From a technical point of view, in the later period, after the continuous decline of the market, the price difference between spot and future is narrowing, the short-term fluctuate repair was the mainstay, and the short-term material fluctuated around the 7350-7550 line.

Chapter 2  Analysis of domestic supply situation of polypropylene

Recently, the number of malfunction devices needing maintenance has increased, the operation load has been difficult to increase, the loss of burden reduction has continued to rise slightly, and the overall supply of PP has changed from increasing to declining during the week. The weekly output was 620,000 tons, down 16,000 tons or 2.52% from 636,000 tons last week.

Table 3  Weekly maintenance statistics of polypropylene devices in China

Chapter 3  Analysis of domestic demand for polypropylene

3.1 Polypropylene downstream market analysis

In terms of plastic weaving: at present, the order situation of the factory is still average: the order volume of large enterprises is acceptable, and the orders of large enterprises are about 6-8 days; The order situation of small and medium-sized plastic weaving enterprises is just average level, and the production is made according to the order. At present, the profit of finished products in the downstream is not high, and the factory replenish the stock according to rigid need. With the gradual start of the winter storage market, the terminal fertilizer plant has started to increase operation, and a small amount of raw material reserves have begun one after another, but most of them are concentrated in large enterprises.

BOPP: This week, domestic BOPP prices stabilized, and as of this Thursday, the mainstream price of thick film in East China was 8700-8900 yuan/ton. Raw materials fluctuated slightly, and new film orders of companies may follow up.

3.2  Statistics on the operating rate of polypropylene downstream enterprises

The overall average operation rate of the PP downstream industry remained at 55.5%, down 1% from last week. Among them, the operating rate of BOPP and non-woven fabrics increased slightly, and the downstream operating rates of CPP and transparent materials decreased slightly. In terms of the market outlook, the non-woven fabric industry has maintained good orders due to the cooler weather in the later period such as the demand for sanitary products and others, and the short-term orders of other categories have not changed significantly compared with the previous period, and there is still pressure on new orders in the long term.

Chapter 4  Polypropylene Upstream Market Analysis

4.1 Methanol trend analysis

In terms of cost, the recent coal price has been stable and weak under the suppression of high inventories, the low-price sale by products holders has increased, and the mentality of the business people is not good, but considering that after entering December, with the advent of the cold wave, power plants and non-power enterprises also have the need to replenish the warehouse, and the procurement demand may be released, which may support the coal price to stop falling and stabilize to a certain extent. On the supply side: At present, some gas head devices in the field have been stopped as scheduled, Qinghai Zhonghao, Gansu Liuhua, Yunnan Yunwei, Lutianhua devices are parked, Yanchang Zhongmei devices will be operated on November 20, and there will still be gas head devices stopped operation in the later stage, and there is an expectation of reduction in local market supply, coupled with the impact of factors such as winter gas restrictions and environmental pollution, the methanol mainland market is expected to start or decline. In terms of ports, in the near future, the arrival of imported cargo has always maintained a high level, after December, some methanol devices are planned to do maintenance in some regions of Iran, when the domestic methanol import volume is expected to shrink, but the overall import shrink is not large, and the total import volume rate is expected to remain at about 1.25 million tons in December. On the demand side: at present, the overall operation of downstream olefin remains relatively high, with the restart and stable operation of the maintenance devices, the downstream demand for methanol in some areas is improving, but the traditional downstream market is affected by the cooling weather, and the characteristics of some off-season consumption of downstream factories are gradually highlighted, and the market operation may be limited, and the weakness of demand in the short term is still the main factor dragging down the market price increase. At present, the market is still in the game stage, it is expected that the short-term methanol market price will continue to fluctuate in the range, and in the medium and long term, after entering December, the cost side of coal prices still give methanol some support, but considering that the terminal downstream market demand is expected to weaken, the demand side is difficult to have a significant improvement, the weakness of demand is still the main factor dragging down the market trend, and it is expected that the methanol market in December may maintain a low level fluctuation trend, and it is necessary to pay close attention to crude oil, coal price, on-site equipment operation situation and the follow-up of downstream demand in the later stage.

Chapter 5  Polypropylene Trend Forecast

On the cost side: after the short-term continuous decline in international oil prices, the deepening of production cuts in the later period is still a high probability event, and the focus will be on the OPEC+ Meeting in the later stage, and the medium-term crude oil will still maintain a range-bound operation. In December, the temperature is still expected to drop, the demand for civil using electricity will increase, the daily consumption of downstream power plants will also increase, and the process of coal inventory destocking will be accelerated. On the supply side: Chambroad Second Line (400,000 tons/year) and Ningbo Jinfa First Line (400,000 tons/year) plan to stop for maintenance next week, but Yanshan Second Line, Dushanzi Third Line, Zhongyuan Second Line, Dalian First Line and other early parking for maintenance enterprises have resumed work one after another. In addition, the supply side of the market operation expanded intensively in December, and the pressure on PP supply still existed. On the demand side, it is difficult to increase new orders in major downstream industries and show a gradual slowdown trend, and the demand for raw materials is weakening. From the perspective of speculative demand, the current midstream inventory is still not high, and the short-term plan was made to choose whether to build warehouses according to the rise and fall of the market, and pay attention to the change of the rebound of the market. On the inventory side: According to the inventory trend in previous years, in view of the current petrochemical grasp of market demand and effective planning of production arrangements, it is expected that the two oil inventories will continue to operate at a low level at the beginning of the month, and the role of supporting the market will continue to exert force. To sum up, it is expected that the domestic PP market will be dominated by fluctuation next week.