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[Industry Focus]：PP market started weak in August, where will the future go?

Read： 323 Time：3months ago Source：Business Club

1. Market Overview

PP市场行情走势.jpg

in early August, the polypropylene (PP) market continued to show a weak finishing trend, and the prices of various brands fluctuated within a narrow range. As of the afternoon of August 6, the mainstream offer price of wire drawing between domestic manufacturers and traders was stable at around 7807.14 yuan/ton, showing that PP price the trend of a slight decline of 0.55 per cent in the week, the market as a whole lacks significant upward momentum.

2. Raw Material Market Impact Analysis

1. International crude oil market dynamics

at the end of last month, the volatility of the international crude oil market intensified due to multiple factors, and the overall price decline caused by the setback of market confidence. However, the recent continuous decline in US crude oil inventories beyond expectations, coupled with the escalation of tensions in the Middle East, the market is generally optimistic about the market outlook. OPEC +'s insistence on production cuts has further strengthened expectations of rising international oil prices, which has provided some cost support to the PP market.

2. Trend of raw material propylene and propane

in the propylene market, the speed of supply circulation remained stable, and the price showed a volatile adjustment trend. The propane market, on the other hand, was driven by rising LPG prices, which were firm and improved PDH costs, indirectly raising the production costs of PP. Overall, the recent raw material market support for PP has been enhanced.

Analysis of the current situation of 3. supply side

1. Starting load of the enterprise

at the beginning of August, domestic PP enterprises maintained an average start-up level of more than 70% in the previous period, and the overall load of the industry was stable at about 75%. The recent news of short repair of the device is relatively few, and the news of resumption of work is not frequent, indicating that there is a trend of increasing supply in the future. The production level remained stable, but the inventory of wire-drawing materials rose, and enterprises made a narrow reduction in factory pricing in order to ease the pressure on inventory.

2. Supply pressure assessment

at present, the supply of goods in the market is still abundant, supply pressure is rising steadily. Although there is no large-scale expansion or reduction of production in the short term, the sustained high inventory level is still one of the important factors restricting the price rise of PP.

4. demand-side performance and challenges

1. Terminal enterprise load downturn

at the beginning of August, there was no significant improvement in the demand side of PP, and the load of terminal enterprises was generally maintained at a low level. Fertilizer, cement and other woven bag consumption into the off-season, plastic weaving enterprises operating rate low narrow down, the willingness to replenish the warehouse is not strong. Membrane enterprises, due to the high price of raw materials and cost transfer difficulties, profit margins are limited, replenishment operations around the just need to carry out. The comprehensive operating rate of injection molding enterprises is also at a low level and has a downward trend.

2. Downstream market trading atmosphere

PP downstream market trading atmosphere is general, new orders are limited, most transactions are pre-delivery contracts. The demand side of the PP market support is weak, it is difficult to form an effective market demand pull.

5. Outlook and Forecast

taking into account the current market fundamentals, it is expected that the domestic PP market prices will remain narrow downward trend in the near future. Upstream raw material market support for PP has picked up, but the demand side of the off-season market is difficult to change, and the market supply has an increasing trend. After the market enters August, there is a need to move positions for the month, which may activate some funds to enter the market to drive the base spread stronger. However, due to the inactive trading on the floor, new orders are mostly concentrated in the low-end position, and price increases are facing greater resistance. Therefore, in the short term PP market or will continue to run mainly weak finishing.

Source: Business

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