SunSirs: Rubber and Plastic: PP is Weakly Sideways (December 9-13)

1. Price Trend

According to the data from SunSirs, the domestic PP market trend in the first half of December fluctuated and adjusted weakly. Up to Friday, December 13, some spot prices have been lower than at the beginning of the month. The mainstream offer price of domestic producers and traders of T30S is around 8,133.33 RMB/ton, a decrease of 2.01% from the beginning of the week.

2. Market Analysis

Upstream: According to the data from SunSirs, domestic PP raw material, that is propylene market; its prices have been declining recently. In early December, affected by the international "Black Friday" market price of crude oil, prices began to fall all the way.

Recently affected by heavy fog in Shandong area, the logistics is not smooth. The external supply of goods is blocked, which has supported the propylene market.

In terms of external disks, the spot price of polymer grade propylene in the United States fell to its lowest level in more than three years on Thursday, which also had a negative impact on propylene.

On the upstream side, the OPEC plus meeting’s production reduction agreement was postponed and its influence strengthened. International crude oil rose sharply, which had a favorable impact on propylene.

Downstream procurement is good, which has a certain positive impact on propylene. It is expected that the market price of propylene may start to stabilize and pick up recently.

Products: The upstream propylene fell weakly. This week, the average operating rate of domestic PP polymerization enterprises was approximately 95.09%, which was slightly higher than last week.

There was no recent news about shutdown and maintenance of equipment. It is expected that the operating rate of domestic polypropylene enterprises will remain stable next week.

In terms of inventory, the total PP inventory of the two barrel oil sales companies continued to decline slightly, and the inventory of traders continued to decline. At present, the operation of petrochemical enterprises prefers destocking.

The mentality of the operators is empty, and the ex-factory price is difficult to rise. The operating rate of downstream plants rose slightly, and the improvement in demand for PP has not yet appeared.

Generally, trading remained sluggish, and the price was not well supported. The price of propylene in Shandong continued to fall.

In terms of external news, the International Monetary Fund lowered the global economic growth rate to 3% in 2019, the slowest growth rate in 10 years, hitting market confidence.

3. Market Forecasting

SunSirs' PP analysts believe that the overall price of domestic PP fell in the first half of December.

The upstream propylene market is weak, and cost-side support is limited.

Downstream factories have no centralized procurement for the time being to pick up the goods, and the industry's confidence is not enough.

It is expected that the recent PP market may continue to adjust at a low level, and it is recommended to pay close attention to the recent changes in the cost of propylene market.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com