SunSirs: Polypropylene’s Vertical Rise Detonated Plastic Market

On April 13 (Monday), today's polypropylene (PP) index is a vertical rise. Domestic petrochemical factory prices go up, traders from time to time to scrap prices. Spot price of domestic polypropylene market is soaring, and polypropylene is available for a short time. The search for goods has no price area, the surge will come momentum. PP futures again trading limit, impel the market speculation atmosphere. By the afternoon of April 13, the mainstream offer price of domestic manufacturers and traders in T30S (wiredrawing) is around 8533.33 yuan/ton. Film material, injection of plastic in the same pace up, fiber material goes higher. Today's strong market after the weekend rally, more than the weekend rally. It rose 16.89 per cent, surpassing last week's gain of 14.36 per cent.

Inflection point back to see

Rome wasn't built in a day. Especially in China's plastic industry demand is weakening and polypropylene production capacity rapid growth of the background, polypropylene (PP) can have a recent increase is really a blessing in the small. This article, SunSirs polypropylene analyst takes you together to analyze the reason.

The turning point came last week on April 6. Sunsirs show that April 1-13 PP spot shock adjustment after the steady, since April 6 from the rapid pull up, and the end of three consecutive months of decline. Today's rise is particularly good, the average daily spot price per ton reference 16.89%. And this with the international crude oil price shock synchronization rate very high subtle inflection point, let us have reason to believe that the starting point of the industrial chain - crude oil, its rise is the catalyst for the polypropylene market heavyweight fuse.

Upstream of the conduction

On April 2, on outside news that Saudi Arabia and Russia were on track to reach an agreement to cut output, both WTI and Brent rose more than 25 percent, their biggest daily gains on record. On April 9, the end of the OPEC + special meeting, its output cut was less than the market expected, oil prices fell back. Russian President Vladimir Putin, U.S. President Donald trump and Saudi king Salman spoke by phone on Sunday about an oil production cut agreement between OPEC and non-OPEC producers including Russia, Xinhua reported on Sunday. In a statement on the kremlin website, Putin, Trump and Salman expressed support for the agreement. Since early April, oil prices have risen by 11.13% overall. The plasticization industry relies mostly on top-cost crude oil. The recent rise in crude oil, crude oil and polypropylene as futures varieties have a strong financial attribute, so the rise in the market transmission sensitive and rapid.

In addition, the direct upstream of PP propylene recent trend is also relatively fast. Many traders raised prices over the weekend, with some companies reported to have risen nearly 100%. Shandong propylene prices fell last month, a monthly drop of more than 15 percent. After the Qingming period, the price of propylene steadily increased, the market transaction has soared to 8,000 to 12,000 yuan/ton, some manufacturers suspended quotation. The market transaction has soared 8000~ 12,000 yuan/ton, some manufacturers even suspended quotation. The upstream production reduction is good, the downstream purchase enthusiasm is good and the raw material shortage, market participants positive mentality. It can be seen from the industrial chain relationship of polypropylene that the recent sharp rise of propylene has a direct transmission effect on the sharp rise of polypropylene. Get crude oil and propylene near and far double cost end of the rally, is the formation of the cost side of the polypropylene surge.

Futures push

When it comes to futures, they could be an important driver of today's spot rally. 10, 05 contracts rose 398 points, trading limit closed. 13, PP09 significantly high open, PP05 again trading limit. PP05 contract delivery, investors with speculation, the market is immersed in a school of speculation atmosphere. Moreover, the position of about 100,000 hands is more than twice that of the same period. Whether the PP05 contract is successfully delivered will become the main concern. In addition to the above international crude oil prices, the current social public health events caused by propylene demand gap is also a big driver. Futures have a strong impact on spot prices in the near future, is the financial aspects of the rally.

Masks crisis

Analysis of the current polypropylene inflation, the nature of the rapid growth of prevention and control materials. Since the Spring Festival, China has added about 30,000 mask factories. Fiber material, melting and spraying material demand quickly pull up. The surging demand for polypropylene enterprises and society caught by surprise, petrochemical enterprises have to switch to production in short supply. 

Before the outbreak of this social public health event, the proportion of fiber material production is about 35%, the current fiber material production has reached a historical high level, melting polypropylene has also experienced a substantial expansion. 

Even so, some brand products are still large gap. The tilting of the variety demand and the production arrangement also resulted in the decrease of the production ratio of co-polymer injection plastics and drawing materials. 

Last year, the percentage of PP drawing material production capacity was about 33%. Recently, a large number of enterprises switched to production, which caused the percentage of drawing material production capacity to drop to around 22%. Drawing material as the mainstream of the market materials, just need to be strong, large demand. According to long tracking understand, the short - term production mismatch contradictions or will lead to the late drawing material faced with supply shortage. The "mask crisis" is arguably the demand side factor driving up polypropylene prices.

Market Forecast: SunSirs PP analysts think that during the current special period, the overseas health prevention and control situation is still unclear, domestic and foreign polypropylene fiber material, and spray melting material in the short-term demand recession is less likely. There is still room to improve the load of downstream factories such as wiredrawing and copolymerization, and the maintenance peak season of this year is approaching, the production line start-up situation is complex, still need to be further observed. At the same time, due to production capacity mismatch contradiction lift, some materials are facing supply weakening expectations. In addition, cost side support is consistent to good, therefore, it is expected that in the short term the overall price of polypropylene will remain high.

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