SunSirs: The trend of PP Market in June Depends on the New Production in the Industry

According to the commodity market analysis system of SunSirs, the domestic PP market was in a state of consolidation in May, and the prices of some brands of products were slightly reduced. As of May 31, the mainstream quoted price of wire drawing by domestic manufacturers and traders was around 7393.33 RMB/ton, a decrease of -1.18% compared with the price level in early May.

Raw materials:

From April to early May, the US tariff policy was implemented, and the tax rate was changed every day, and it continued to rise to an unprecedented height. The tariff trade war launched by Trump has brought a huge impact on the global economy. Crude oil has plummeted as a hard-hit area. With the release of many positive signals such as the suspension of tariffs in the mid-May Sino-US talks, crude oil prices have rebounded continuously. In addition, the geopolitical situation in the Middle East and Eastern Europe is tense, the risk of crude oil supply has increased, and the price performance is strong. At the same time, the decoupling of domestic propane trade is expected to be gradually lifted, and the cost pressure of PDH-making enterprises in the future market may be reduced, but the demand differentiation will hinder the increase. There is a certain degree of supply easing in propylene, and the digestion speed is average, so the price fluctuates and falls.

Overall, the market prices of various raw materials of PP fluctuated in May, with both rises and falls, and the overall support for PP cost side is general.

Supply side:

In May, the load of domestic PP enterprises was stable and slightly fluctuated, and it rose and then fell back, and the market supply remained generally sufficient. Overall, the current overall load level of the industry has increased by 1% to around 77% compared with the end of April, and the average weekly total output of about 750,000 tons has also remained flat. The production capacity lost by the maintenance plans of enterprises such as Sinopec Tianjin, Ningbo Formosa Plastics, JuzhengRMB, and Jinneng Chemical in the interval has been basically smoothed out by the restart of enterprises such as Lanzhou Petrochemical. At the same time, the new production capacity of 1.4 million tons in the next quarter is about to be put into production, and the expectation of loose supply in the future market is obvious. The total domestic inventory has dropped slightly to below 820,000 tons, but it is still at a high level. Overall, the supply side still has a certain suppression on the spot price of PP.

Demand side:

In May, the demand side of PP continued to be weak, and the on-site trading gradually entered the traditional off-season. The stocking was basically completed before the Dragon Boat Festival, and the market maintained a weak rigid demand situation. In terms of plastic weaving, the consumption level of terminal enterprises returned to the off-season level ahead of schedule. With the passing of the small peak of material consumption in the fields of construction, agriculture, etc., the release speed of PP demand has slowed down. The news of the suspension of Sino-US tariffs in the early stage stimulated market sentiment, and consumption increased briefly. The impact has cooled down at the end of the month. Although the export resistance of domestic PP downstream products has decreased, it will take some time for the delivery of export orders to increase. At the same time, there is still supply pressure in the industry, and the inventory still needs to be liquidated, and some positive factors are hedged. At present, buyers are cautious in purchasing and taking goods to maintain production, tending to scattered small orders, and the market's new orders have returned to flat. Overall, the performance of PP demand in May is average.

Market outlook

The domestic PP market price was weak in May. From a fundamental perspective, the prices of upstream raw materials fluctuated, and the overall support for PP was average. The industry has sufficient supply, inventory continues to be digested, and consumption has entered the off-season level. At present, the positive sentiment of macroeconomic policies has been digested, and the market has returned to the dominant supply and demand.

It is expected that the PP market will continue to consolidate in early June, and it is recommended to pay close attention to the new production in the industry.

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