SunSirs: Weak Downstream Follow-up Make PP in Dysfunction of Supply and Demand (Feb. 10-14)

The national PP market weakened in the middle of February. Its spot price significantly reduced this week. As of February 14, the main offer price of T30S by national producers and traders was about 6933.33 RMB / ton, a decrease of nearly 4.81% compared with the price at the beginning of the week.

Upstream: The price of national propylene market continued to decline in the first half of this week, with the overall trend falling and with a weekly decline of 1.85%. Since February, the price of propylene in Shandong Province has been declining all the way. At present, there is much equipment in the upstream and downstream industries that are shut down for maintenance and the operating rate is still low. However, affected by COVID-19, some refineries are shipping at low price under the pressure of inventory. However, it ends up in few transactions. The market is cold and people wait-and-see. It is expected that the market price of propylene will fluctuate around current price in recent days. 

Since the Spring Festival, the upstream crude oil market has continued to decline. Although it has slightly revised back in the near future. The range of change is limited and the support for propylene is poor. It is expected that the propylene market will be relatively cold in recent day and the price may be subject to current price. 

Product: This week's propylene market is average, and the cost side is not good for PP support. The national logistics is not smooth as it used to be, which leads to the increase of stock pressure in petrochemical plants.

In terms of demand, although downstream factories began to resume work, there were fewer workers and lower starting load compared with that last year. It leads to less actual demand and slow procurement. The mentality of the industry is affected, and the lack of confidence in the future market gradually leads to the loss of profits. The market performance was calm and terminal trading was light.

Future forecast: PP analysts of SunSirs believe that this week, the national PP spot market showed a weak down market. The upstream propylene price fell showing poor support for the cost side. 

The obstacle that limited logistics transportation and sluggish demand follow-up of downstream factories leverage the supply-demand contradiction in special period. In addition, it restricts the short-term PP spot price. The business sold at a profit and the trading was flat. 

It is expected that the demand will improve to some extent with the increase of downstream plant load. Meanwhile, it is suggested to pay close attention to the recovery of logistics in the near future.

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