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Chinese Polypropylene Market Weekly Reports (2020.04.24-04.30)

Chinese Polypropylene Market Weekly Reports (2020.04.24-04.30)

According to the valuation of polypropylene, the polypropylene market fluctuated and moved upwards during this week, mainly due to the consumption of two oil inventories at the end of the month and the downstream companies to make up the appropriate amount of positions, which supported the market offer to increase. However, most players still worrying about the post-holiday market, and the constant influx of low price imported goods into the domestic market will have an impact which aggravate the market's short-selling sentiment. The mainstream offer has increased by 200-400 Yuan/ ton compared with last week.

Prediction for PP market next week.
The downstream manufacturers' orders will continue to be poor, but the raw material inventory is high, the purchase enthusiasm will be weak, and the mentality tends to be cautious. The supply and demand pressure caused by the epidemic is still there.

1. Polypropylene Selling Market
1) Analysis of domestic PP market.
This week, the PP market will rise first and then maintain the trend of interval consolidation. At the beginning of this week, the factory prices of Sinopec and PetroChina will continue to rise, and the market bullish atmosphere will become stronger. At the same time, the end of the month will come, and the market circulation will be tight, the rising trend of spot goods continues. However, the downstream manufacturers generally inquire about the high price source of goods, most of which are just in need of purchase. It is difficult to make a large volume of firm offers close to the May Day holiday. Most of the enterprises stay away from the market and wait and see. The enthusiasm of market entry operation is low, and market trading slows down. However, supported by the ex factory prices of the two oils, the market is not worried about a big drop. In the short term, the trend of interval consolidation is maintained until the closing, and the mainstream offer of brushed is 7250-7700 yuan / ton.

2) Domestic polypropylene futures analysis.
Affected by the epidemic, the global economic performance is sluggish. The IMF's reduction of global GDP growth forecast has dampened market confidence. From the basic point of view, the profits of imported resources continue to flow to China. At the same time, the proportion of domestic wire drawing and production scheduling has increased. Under the influence of the epidemic, the orders of export enterprises have shrunk significantly, the high domestic price has squeezed the downstream profits, the operating rate has declined, and the demand is in a weak pattern. The upstream drawdown is smooth, the spot drawing is in short supply, and the May Day holiday is near. There is a small amount of replenishment demand in the downstream. The overall quotation in the field is narrow and the drawing price is small. In terms of the average system, under the K-line test 10 day average support; MACD index red column slightly increased; KDJ index skewed. To sum up, the short-term volatility of pp2009 contract is expected to fluctuate in 6800-7100 operation, and it is recommended to make more profits in the early stage.

2. Polypropylene supply
Analysis on the start-up of polypropylene enterprises this week.
This week, the maintenance loss of domestic polypropylene plant was 45500 tons, a decrease of 9600 tons or 17.4% compared with last week. The maintenance was mainly concentrated in the northwest and South China region. The second phase of CNOOC, Fujian united and Qinzhou petrochemical plants were successively restarted in the week, and the first line of Yan'an refinery, Shenhua Yulin and Dushanzi petrochemical plants were still shut down. In the later period of May, Zhenhai Refining and Chemical Co., Ltd., Tianjin United, Tianjin Zhongsha, shenhuaning coal to liquid and other storage and maintenance plans relieved the pressure on the supply side to a certain extent.

3. Polypropylene market industry chain
Crude oil: the international crude oil futures show a wide fluctuation trend. The average price of the two oil companies in the United States and Brazzaville is up and down from last week. In the week, the main factors that lead to the formation of favorable support for the oil price are the aggravation of geographical conflicts and the boost of market sentiment brought about by the upcoming landing of production reduction agreement. Crude oil prices rebounded early in the week on expectations of rising risks from geopolitical frictions between the US and Iran. Secondly, the new OPEC production reduction agreement with a scale of 9.7 million barrels / day is about to be implemented in early May. According to market news, some countries have announced plans to gradually loosen the blockade measures and restart economic activities in May, which to some extent eased the negative pressure on both sides of the supply and demand of the crude oil market and provided support for the crude oil price in the week. In addition, although U.S. crude oil stocks are still rising, the lower than market expectations also gave some boost to bull sentiment. On the other hand, investors generally believe that the shortage of idle crude oil storage space in the world is difficult to alleviate in the short term. The current situation of oversupply of crude oil market is further aggravating the shortage of idle oil storage space in the world. The reduction of OPEC production is still lower than the market expectation. At the moment when the epidemic situation is not significantly improved, according to the current situation of oil resource accumulation, Even after the implementation of the new production reduction agreement, the global crude oil storage capacity still has the possibility of peaking in June, which also makes the current oil price still face great downward pressure.

Propylene: in this cycle, the Asian propylene market stopped falling and rose slightly. On April 29, the Asian propylene market was quoted at 682-690 US dollars / ton CFR China, an increase of 30 US dollars / ton compared with the closing of last week; FOB South Korea was at 632-640 US dollars / ton, an increase of 30 US dollars / ton compared with the closing of last week. Due to the continuous rise of naphtha price and the low price of ethylene, the start-up of domestic oil plants in South Korea has declined. At the same time, the shutdown of PDH plants in China has been concentrated, and the tight spot supply has pushed up the indicative quotation. Chinese buyers have a good enthusiasm for purchasing imported spot products. In recent years, the demand for polypropylene in China has improved again, and the enthusiasm for start-up has picked up. In addition, with the May Day holiday approaching, the enthusiasm for purchasing raw propylene has increased However, the price difference between polypropylene and propylene continues to narrow, from $115 / ton at the beginning of the week to $95 / ton, far below the break even price difference of $150 / ton, and the downstream replenishment is still relatively cautious.

4. Polypropylene demand
PP woven relative industry: the average operating rate of domestic PP woven bags and pp woven fabric rolls manufacturing this week is the same as that of last week, and the average operating rate of Polypropylene woven bags manufacturing is maintained at 57.78%. There is no significant change in the overall operation of domestic pp woven enterprises this week, mainly because the trend of raw material prices in Shandong region is strong within the week, and the orders of pp woven bags, fabric rolls and bopp laminated woven bags for the WOVEN PP manufacturers have not been followed up, and the profits of enterprises shrink, so it is difficult for local manufacturers to improve their operation; Due to the difficulty in sales of most products of woven bags factories in Jiangsu and Zhejiang, the profits of enterprises are difficult to maintain, and the overall operation level is normal. The working rate of woven pp in Shandong Province is 52.00%, which is the same as that in last week; that in Jiangsu and Zhejiang Province is 65.00%, which is the same as that in last week

BOPP: in this week, the average operating rate of BOPP manufacturers is about 51.52%, which is 1.27% higher than that of last week. In this week, the maintenance of Yongning in Zhongshan was completed, and the starting rate was increased compared with that of the earlier stage. The May Day holiday was coming, the downstream just needed to prepare goods, and the follow-up of new orders was insufficient. In order to alleviate the contradiction between supply and demand, some manufacturers shut down and reduce the load. It is expected that the operating rate of manufacturers will go down slightly next week, and the two lines of Kaili in Zhejiang will be overhauled in turn, Dalian Kaiwei two lines are overhauled in turn, Panjin Jintian one line is overhauled, Tongcheng Jintian two lines are overhauled in turn, Jiangsu Shuangliang one line is overhauled, Xiaoshan Huayi one line is overhauled.

5. Polypropylene market outlook
To sum up, it is expected that the price of PP market will fall after a small rise due to the holiday. It is expected that the inventory of Liangyou oil will have a small rise trend, and the market will slow down in digesting resources. However, after May 6, the high-speed expenses will not be reduced. It is expected that there will be a phenomenon of resource allocation in different places in advance during the holiday, and the data of Liangyou oil depot is expected to be controllable after a small long holiday.

Demand side: the orders of downstream manufacturers continue to be poor, but the stock of raw materials is high, the purchasing enthusiasm is general, the mentality tends to be cautious, the supply and demand pressure caused by the epidemic is still there, and it is expected that the PP aggregate market will fall after a small rise in the near future.

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