According to the Commodity Market Analysis System of SunSirs, the prices of various varieties in the plastic sector have significantly increased recently. As of March 4th, the benchmark price of LLDPE (7042) was 7,325 RMB/ton, with a price increase of 10.71% since the beginning of the month; The benchmark price of PP wire drawing material is 7,320 RMB/ton, an increase of 9.85%; The benchmark price of ABS is 10,016.67 RMB/ton, an increase of 12.21%.

Recently, the international crude oil market has continued to strengthen driven by geopolitical factors, becoming the most direct reason for the increase in the cost center of the plastic sector. Affected by the escalating geopolitical situation in the Middle East, market concerns about global crude oil supply have intensified. On March 3rd, the settlement price of the April contract for WTI crude oil futures in the United States was $74.56 per barrel, an increase of $3.33 or 4.7%. The settlement price of Brent crude oil futures for May was $81.40 per barrel, an increase of $3.66 or 4.7%. As the source of the plastic industry chain, crude oil's price fluctuations rapidly spread downstream. The cost support for the oil to olefin pathway has suddenly increased, and production companies have raised their ex factory prices to alleviate profit pressure, triggering the current upward trend in the plastic sector.

Domestic supply side: increased device maintenance+relief of supply pressure during the period of new production capacity gaps

In addition to cost push, the domestic plastic supply side has also experienced a phase of tightening. March and April is the traditional maintenance season for petrochemical plants. Currently, some PP and PE plants of enterprises such as Zhenhai Refining and Chemical and Zhejiang Petrochemical have planned or advanced shutdowns for maintenance, involving relatively concentrated production capacity. At the same time, the operational stability of some newly put into operation units in the early stage was insufficient, and the output was lower than expected, resulting in an overall relief of market supply pressure compared to the early stage. The inventory clearance of production enterprises is smooth, and some sources of goods are experiencing structural shortages. Manufacturers have a strong willingness to raise prices, further boosting the strength of spot prices.

Market sentiment and demand: post holiday restocking+"Golden Three" expectations amplify gains

Post holiday replenishment demand release: After the Spring Festival, downstream product companies' operating rates have steadily rebounded, raw material inventories are in a rigid replenishment cycle after consumption, centralized procurement behavior has increased, and the trading atmosphere in the spot market is hot.

Expectations for the peak season of "Golden Three Silver Four": The market has a good expectation for the traditional consumption season of "Golden Three Silver Four". The demand for agricultural film has entered the peak season, and orders for packaging, injection molding, and other products have also rebounded. The marginal improvement in demand resonates with the benefits of cost and supply, amplifying the short-term price increase.

The key to the sharp rise in the plastic sector this time lies in how long the cost side driving force can last, and whether downstream demand can accommodate high priced raw materials.

Upstream level: The core focus is on the further development of the Middle East situation and the direction of international oil prices. If geopolitical conflicts persist and oil prices remain high, the cost support for plastics will continue to exist. But we need to be vigilant about the risks brought by the high oil price correction.

On the supply side, attention should be paid to the actual recovery progress of maintenance equipment and the deployment of new production capacity. If the maintenance equipment is restarted in the later stage and the new production capacity is smoothly increased, the favorable situation on the supply side will gradually weaken.

On the demand side: The true demand quality during the peak season of the "Golden Three" will be the key to determining the market height. If downstream orders are sufficient and cost pressures can be smoothly transmitted, plastic prices are expected to receive support at a high level; On the contrary, if downstream parties have resistance to high priced raw materials and procurement slows down, it may suppress further upward space for prices.

In summary, in the short term, with the combined effect of cost support and improvement in supply and demand, it is expected that the plastic sector market will maintain a strong and volatile trend. We need to closely monitor the changes in international oil prices, the dynamics of petrochemical facilities, and the follow-up of downstream demand in the future.

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