SunSirs: Plastics, the Destocking Petrochemicals, Weak Upstream And Weak PP in December

1. Price Trend

According to data from SunSirs, the domestic PP market price trend was weakly lowered in December. Up to December 31, some spot prices were lower than at the beginning of the month. The mainstream offer price of domestic manufacturers and traders of T30S is around 7,833.33 RMB / ton, a decrease of 6.56% from the beginning of the week.

2. Market Analysis

Upstream: The upstream of PP--propylene price of was expected to be affected by the international “Black Friday” market of crude oil in early December, and began to decline. At the end of the month, corporate prices began to decline again on December 25, falling about 200 RMB / ton for two days, and prices began to rise at the end of the month.

On the upstream side, the news of OPEC's extended output reduction policy has affected the international crude oil market's high level consolidation, but the increase is not large, which has a certain effect on propylene.

On the downstream side, downstream manufacturers have gradually resumed operations, shipping conditions have improved, and profit margins are still acceptable, which will also have a certain positive impact on propylene.

Taken together, the propylene market plummeted twice in December, with a total decline of nearly 10%. At the end of the month, it started to pick up slightly from annual low prices. The downstream operating rate is good, and the profit margin is acceptable.

Products: Cost support goes weaken. Some domestic petrochemical prices have been reduced. High spot prices in the market have obvious resistance to transaction. And merchants' purchase intention is low, and they keep based-on needs procurement. Terminal trading atmosphere is light.

The PP market price fell this month, and the contradiction between supply and demand in the market increased. As the New Year's Day approaches, the two oil companies will actively go to depots, and inventory will remain low. Under the current situation of weak spot, downstream player begin to replenish when price is low than average. And they still keep their inventory at a low level. It is expected that the inventory on the first day of January will be 580,000-620,000 tons. At the end of the month, the average operating rate of domestic polypropylene companies was 96.24%. It is expected that the operating rate of domestic polypropylene companies will increase in early January.

3. Market Forecasting

SunSirs analyst PP analyst believes that the domestic PP price fell overall in December. The upstream propylene market is weak, and cost-side support is poor. The downstream factories bought on low price, and continued to take the strategy to get goods. The price of the petrochemical plant was lowered, and the industry's confidence was insufficient. 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.

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