SunSirs: The Supply Side will be under Pressure after PP is put into Production in China

According to the data monitored by SunSirs, the market trend of China domestic PP fluctuated slightly in the second week of August, and the price of various brands increased or decreased slightly. As of August 14, the mainstream offer price of T30S (wire drawing) of domestic manufacturers and traders was about 7,900.00 RMB/ ton, which was 1.28% higher than the average price level at the beginning of the month, with a weekly decrease of 0.84%.

Market Analysis

In terms of polypropylene upstream propylene, according to SunSirs’ data, the recent market trend of propylene cyclical shocks. At present, the inventory of propylene manufacturers is not under pressure, the crude oil price is slightly upward, the downstream polypropylene futures are in high swing, and the profit margin of propylene oxide is rising, and the overall market procurement is picking up, and the market is good. But there are also some downstream obvious downward, there is a certain negative impact. Due to the overall downstream support, it is expected that the propylene price may still rise in the short term.

The upstream propylene breaks through the recent price fluctuation range and tends to be strong, which has cost support for PP. According to the data monitored by SunSirs, the market performance of PP (wire drawing) in the first half of August showed a steady rise, with a slight correction this week. The recent strong trend of the far upstream crude oil also formed a certain support for chemicals. In addition, due to the extreme weather at the beginning of the month, the arrival of imported goods was delayed, and the port PP inventory decreased compared with the same period of last year, which was good for PP and supported the firmness of spot price. However, in the middle and late August, the production of PP maintenance devices will be resumed. At that time, the domestic PP supply will increase significantly, which will form a certain pressure on the price. It is expected that the PP (wire drawing) price may have a correction.

According to the data monitored by the business agency, as of August 14, the mainstream offer price of China domestic manufacturers and traders Z30S (fiber) was about 7,833.33 RMB/ ton, 64% higher than the average price at the beginning of the month. At present, the supply and demand of domestic PP fiber material and drawing material are stable, and the operation situation is similar. It is reported that polypropylene will enter into production peak in the second half of this month. New production lines of Baolai petrochemical, Zhongke refining and Chemical Co., Ltd. and Quanzhou of Sinochem are expected to start trial operation around the end of this month. Just after the peak maintenance season, the production of new equipment is bound to have an impact on PP prices. PP (fiber) is expected to decline in the near future.

The market of PP melt blown materials continues to be weak. According to the price of SunSirs, the current domestic price of PP (melt blown) material continues to decline. As of August 14, the average quoted price of melt blown PP of melt index 1500 by sample enterprises is about 16,300.00 RMB/ ton. The epidemic situation in China was generally stable, and the supply of epidemic prevention related products exceeded demand, and most of the prices fell.

Market Forecast

SunSirs PP analysts believe: August second week China domestic PP spot market trend slightly callback. Upstream propylene market is strong; there is support for PP cost side. PP (drawing) and PP (fiber) are stable and small, but PP (melt blown) demand is still weak, prices continue to callback. At present, the peak maintenance season has passed, and there are many new types of equipment put into production at the same time, which is detrimental to the supply side. Downstream factory stock situation is general, merchants actively shipping. PP futures recently put into production news to suppress the futures, the atmosphere has turned negative. China PP spot price is expected to have a correction in the near future.

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