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SunSirs: Prosperity Is Stronger Than Bearish, Many Factors Affect PP's September Offer (9.1-9.30)

October 10 2019 11:20:50     SunSirs (Eva)

1.Price Trend

According to the data monitored by SunSirs, the domestic PP market was on the strong side in September, with spot price quotations generally rising. As of September 30, the mainstream offer price of T30S by domestic producers and traders was around RMB 8866.67 yuan/ton, up 3.50% from the beginning of the month.

2.Cause analysis

Upstream: Upstream propylene, due to the attack on Saudi oil production plant in mid-term, news that President Trump is considering relaxing sanctions on Iran and Saudi Arabia said that oil production will soon resume, and other international news, the international crude oil market after a sudden dive, the propylene market has a negative impact. However, the supply of propylene is tight before and after the festival, and the current refinery inventory is low. The downstream aggregation factories are still profitable, customers are active in purchasing and trading. Propylene prices fell in late September as stocks were completed and businesses made profits. The downstream aggregate factories are still profitable, but the domestic aggregate factories in many areas are expected to implement the production restriction order, and there is likely to be a demand contraction in the later period.

Products: In September, the overall price of PP market has increased, with emphasis on consolidation. Propylene upstream is weakened by severe international crude oil shocks, and its cost-side support for PP is limited. After this month's "double-festival" inventory boom, combined with the air pollution control program around Beijing-Tianjin wing, the multi-city aggregation plant shut down, two barrels of oil PP inventory and trader inventory continued to decline, businessmen actively shipped, inventory declined significantly. Tight spot supply is good for price formation. By the end of September, PP futures shocked and fell, affecting the confidence of traders. Spot quotation in most areas has loosened, market prices have risen and fallen, and weak shocks. The overall trading atmosphere in the venue is general. On the supply side, besides the restored production of Tang Dynasty, Baofeng Phase II began trial run, and the market supply is expected to increase. At the end of the month, the upsurge of pre-festival stockpiling in downstream factories was basically completed, with fewer high-end price transactions. It is expected that the recent trend of PP will probably continue the trend of shock adjustment.

3.Future Market Forecast

PP analysts of SunSirs believe that the overall trend of domestic PP prices in September is upward. Influenced by the international crude oil shock, propylene upstream declined after rising, and cost-side support was limited. Although the production restriction order of polypropylene plant is expected to be implemented in many areas of China, the recent rework and commissioning of some factories have led to the increase of plant start-up rate in polypropylene enterprises and the expected supply of more negative prices. It is suggested that attention be paid to the supply and demand of PP in the near future.

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