SunSirs: Market Guidance Is Not Strong, July PP Is Stable and Small

According to the data monitored by SunSirs, China PP market trend was weak in the fourth week of July, and the prices of various grades were slightly reduced. As of July 31, the mainstream offer price of T30S (satin finish) by domestic manufacturers and traders was around 7,800 RMB /ton, a decrease of 0.21% from the average price level at the beginning of the month.

Reason Analysis

In terms of polypropylene upstream propylene, according to data from SunSirs, the domestic propylene (Shandong) market price in July showed a typical cyclical fluctuation adjustment. After three rounds of up and down fluctuations, the fluctuation price range was relatively stable. At the beginning of the month, it was 6,866 RMB/ton; at the end of the month, it was 6,825 RMB/ton, with a monthly decrease of 0.60%; the monthly high price appeared from July 9th to 11th, at 6,892 RMB/ton, and the monthly low price appeared on July 4th and 5th is 6,636 RMB/ton, and the monthly amplitude is 3.86%. Propylene manufacturers are now shipping smoothly without inventory pressure. Although crude oil prices have declined slightly, the overall downstream market is relatively satisfactory in the near future. Propylene market prices have continued to rise. Although they have not yet reached the upper limit, their purchasing enthusiasm has declined slightly. The market is mainly based on just-needed procurement. Therefore, it is expected that the propylene price may rise again in recent days and then stabilize.

The upstream propylene rebounded after falling in early July, and is currently at a high level in the range, supporting PP on the cost side.  According to the data monitored by SunSirs, the market performance of PP (satin finish) at the beginning of the month was relatively strong. The spot price began to rise on the 6th, and the average price of each grade increased by about 250 RMB/ton. By the 9th, the satin finish material reached a July high of 8,066.67RMB / ton. Then to the end of the month, the PP (satin finish) market performance slowly declined.Recently, the production line has been shut down frequently for maintenance, and the proportion of wire satin finish scheduling has decreased in July. The powder operating rate has also been affected by previous news, but there is news that new equipment will be put into production in the second half of the year. On the demand side, imports are expected to reach the ports in July, but it is difficult to accumulate inventory. And thus, the improvement in demand is limited. At present, the downstream stocking mood is not high, the wait-and-see mood is heavier, and the actual trading atmosphere is cold. In addition, futures fell in late July, causing the market to follow the downward trend. However, at the end of the month, the business tasks completed well, and the shipping pressure was less than expected. In the near future, futures have risen due to the positive news of port arrival delays. It is expected that PP (satin finish) prices may follow the rise.

According to the data monitored by SunSirs, as of July 31, the mainstream offer price of Z30S (fiber) by domestic producers and traders was around 7,833.33RMB/ton. Compared with the average price level at the beginning of the month, there is a 0.85% drop. The domestic PP (fiber) price market in July was similar to that of PP (satin finish). After more than a month of adjustments in fiber materials, the hidden inventory caused by overproduction has been digested, and PP (fiber) has completely ended the "debt repayment" market last month. Although the overall disk is helped by the macro demand, the destocking speed slowed down in the middle and late ten days, and the pressure on the supply side increased, and there was a profit in the end of the month. The downstream factories have a heavy wait-and-see atmosphere for stocking, insufficient following-up purchase, and poor transactions on the market. The recent extreme weather has delayed the arrival of imported goods in Hong Kong, and it is expected that PP (fiber) disk will rise accordingly.

The market for PP melt blown materials continues to be weak. According to the price of SunSirs, the current domestic PP (melt blown) material prices continue to fall. As of July 31, the average price of melt blown PP offered by sample companies for melt index 1500 is around 16,733.33RMB/ton. Domestic public health incidents are generally stable, and the demand for epidemic prevention materials has dropped rapidly. The current supply of anti-epidemic related products exceeds demand, and prices have mostly fallen. The demand for direct downstream melt blown cloth has also shrunk greatly, and the diversification of epidemic prevention materials also has a certain dispersion in the demand for masks. PP (melt blown) has fallen downstream, and merchants have a negative mentality and there are still many exits. It is expected that in the near future melt blown will still be difficult to improve.

Market Outlook

The PP analyst of SunSirs believes that the domestic PP spot market tended to consolidate in July. The upstream propylene market fluctuates, which generally supports the PP cost side.The price of PP (satin finish) rose after rising in July, and PP (fiber) moved steadily. PP (melt blown) demand weakened, and prices continued to pull back. The benefits of the current domestic maintenance and the news of the production line in the second half of the year coexist, and the terminal digestion slows down the impact of the petrochemical plant's inventory. Downstream factories have poor stocking and follow-up, and merchants' shipments are general. Entering August, PP futures rises due to the positive news of the arrival of imported goods caused by typhoon, boosting the rise in spot prices. Recently, the trading atmosphere has also picked up. It is expected that PP prices may follow up further.

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