SunSirs: Plastics: With The Expansion of Supply Side, PP’s Spot Price Fall Slightly (November 11-18)

1. Price Trend

According to the data from SunSirs, the domestic PP market is weakly sideways in mid-November, and the spot price falls slightly. Up to November 18, the domestic producers and traders T30S offers a mainstream price at 8,416.67 RMB/ton. Compared with the beginning of the month, there is a 1.56% decline.

2. Market Analysis

Industry: Recently, the domestic propylene market price has an increase and then decrease, showing a peak. The price of propylene starts to decline since October. Now propylene have low inventory. In terms of upstream, the overall market for international crude oil is relatively ideal for supporting the price of propylene. In terms of downstream, some equipment in factories in Shandong province has been shut down for maintenance. The demand decreases, which has a bearish impact on propylene market. For domestic acrylic, its price remains stable this week, with no certain impact on propylene price. On the other hand, the price of propylene oxide becomes stable after rising slightly in recent days, with a weekly increase of 1.03%. The market is generally fair. The price of epichlorohydrin (ECH) continues to decline sharply this week, with a weekly decline of 9.22%. Its downstream epoxy resin has restricted by ECH’s market conditions. In the short term, it is mainly weakly sideways, which has a suppressive effect on the acrylic market. Overall, the recent rise in the propylene market has been generally stable. The current propylene stocks are low. The market condition for crude oil and PP market are still ideal, but the downstream equipment is partially stopped. Therefore, it is expected that the propylene market price will still be lowered in recent days.

Products: In the middle of November, the overall price of the PP market fluctuates and adjusts ending in a weak sideway. The upstream product-propylene market fluctuates and gives limited support for cost side of PP. On the supply side, some being maintained devices return to production. Thereby, the operating rate of PP devices has rebounded. It is expected that from the end of this year to the beginning of next year, the PP capacity will also exert a lot of pressure on the supply side. The rapid expansion of PP capacity next year can be technically foreseen. Meanwhile, it is reported that the domestic environmental inspection will begin in the fourth quarter, with a focus on restricting the production of heavy chemical industries especially for steel and chemicals. The influence on environmental protection policy may last until the end of March next year, affecting the current increase in PP stocks within the industry. On the demand side, a few factories just purchase on exact demand, and there is no centralized replenishment. It can be seen that the operating rate of downstream is less likely to have a further improvement under the pressure of the strictly environmental protection policies. This year’s operating rate is much lower than the same period last year. Under such situation, merchants’ business offers fall, with profits going away. The market trading is flat. At present, the destocking rate of petrochemical product has begun to slow down. Based on the news from third-party, it is possible that China and the United States will cancel the tariff increase, which may boost the Asian market. However, the International Monetary Fund has lowered the global economic growth rate this year, affecting the macro atmosphere.

3. Market Forecasting

SunSirs’ PP analysts believe that domestic PP price falls slightly in mid-November. The upstream propylene market fluctuates and the cost end support is quite weak. There is no centralized replenishment of downstream factories, and the on-demand procurement strategy is adopted. Due to the increase in the domestic operating rate, an expansion of production capacity is expected. It can be seen that PP supply will be in a long-term expansion trend, and price is under pressure. It is expected that the PP market will continue to be weakly sideways in the near future. And it is recommended to pay attention to the current PP supply.

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