SunSirs: Weak Cost Support and Demand, Chinese PP Shocked and Fell in March (Mar.1 – Apr.1)

1. Price trend

According to the data monitored by SunSirs, the domestic PP market declined in March, and the spot price fell by a large margin. As of April 1, the mainstream offer price of T30S from domestic manufacturers and traders was around 6,550.00 yuan / ton, a 5.53% drop from the average price level in early March.

2. Cause analysis

Upstream: In upstream, propylene was affected by the OPEC meeting and international market games in March. The news that the international crude oil has been repeatedly lowered has a significant negative effect on propylene. At present, the operating rate of propylene is not high and there is not much inventory, so the decline in the early stage is not significant, and the trend of follow-up decline in the later stage is gradually obvious. Isopropanol downstream is one of the raw materials of disinfectants. Due to the impact of public health events, prices have recently risen sharply, which has a favorable impact on propylene. But the other parades fell more. Coupled with the narrow profit margins of downstream factories, industry players are generally bearish and dragged down the price of propylene, which caused a volatile and declining market in March. At the beginning of April, there may be more companies starting production of propylene, and the output will increase. It is expected that the price of propylene may continue to decline in the near future;

Products: In March, the domestic PP market price fluctuated and fluctuated, and the overall wait-and-see atmosphere was still heavier. Petrochemical companies under pressure to reduce ex-factory prices, traders' offers fell. The resumption of PP downstream plants is average, and the operating rate is not ideal. The atmosphere for on-site procurement enquiries was sluggish, and demand follow-up was weak. Merchants are not confident, the lack of clear guidance on the news side and inventory gradually build up, and traders mostly quote according to their own inventory situation. The overall performance of the futures is also bearish, with a clear downtrend.

3. Forecast

SunSirs PP analysts believe that the domestic PP spot market in March was undoubtedly affected by the complex impact of domestic shutdowns, and price shocks fell. The upstream propylene price also fluctuated and fell, giving poor support to the cost side of PP. The resumption rate of downstream plants needs to be further improved. On the demand side, the follow-up of orders is not timely, and small orders are the main transaction. Petrochemical plant inventory pressure is relatively large, the operator at the end of the month to profit to complete the task. It is expected that the recent PP market may continue to weaken.

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