A Brief Analysis of the Affecting Factors of PP Market in East China in the Later Period

Issuing time:2018-05-11 00:00

I. Review of Trends

In August, PP market prices in eastern China rose steadily, moderately and moderately, and business continued to be flat. Sinopec and PetroChina have set off a wave of price rises, which has played a certain role in driving the market. In addition, the overall resources on the site are not sufficient. Most traders maintain a good mentality, mainly following a small price increase, but subject to weak terminal demand, and the downstream factories are afraid of high delivery, and the overall delivery is always in a poor state.

II. Future Market Forecast

Upstream market: International crude oil, OPEC will hold a meeting in Algiers, capital of Algeria, from September 26 to 28. There are many rumors that member countries will reach a freeze production agreement at this meeting. This time Russia will join the freeze production to prevent further decline in oil prices. The opposition, however, remains nervous because oil production in the major oil-producing countries has quietly soared to new highs. Propylene monomer, part of China's domestic plant closed, the market monomer supply reduced, or to provide some support for short-term prices.

Market supply: In order to ensure the air quality during the 2016 Hangzhou G20 Summit, Zhejiang has issued a plan of action environmental protection to build "West Lake Blue", which divides the polluting enterprises in its jurisdiction into regions and grades, and adopts measures such as stopping production and limiting production respectively. At that time, a number of PP petrochemical plants will be involved. According to the latest news, Shaoxing Sanyuan and Ningbo Taipei Plastics are scheduled to stop and repair in late August and mid-September. Shanghai Petrochemical Company's first and second lines may be driven in turn. Zhenhai Refining and Chemical Company is initially designated as load-reducing production. Yangtze Petrochemical Company, Ningbo Fude Company and Donghua Yangtze River Petrochemical Company are waiting to be finalized. This policy may provide support for the short-term good supply of the market.

Petrochemical aspect: Petrochemical enterprise inventory pressure is not large, near the end of the month delivery continued to decrease, the supply situation or continue to tighten, price intention will not change or will form a stronger support for the spot.

Downstream industry: As a sensitive area of environmental protection, plastic industry is naturally concerned at this special moment. It is reported that most of the enterprises shut down during the period of G20 control are concentrated in high-pollution products enterprises, while plastic products enterprises involve many enterprises, including knitting bags, BOPP, daily necessities, wires and cables and some blow-moulding enterprises, but because most of them do not produce much pollution in the production process, they basically order to reduce production burden. One commodity manufacturer said that they did receive relevant notifications, but because of the recent recession in the plastic industry, their original start-up rate was only 70-80%, so reducing to 50-60% would not have too much impact.

Generally speaking, the downstream factories will face the control of the G20 summit, and the persistent weakness of demand will continue to hinder the development of the market. However, under the support of strong quotation of petrochemical enterprises and low social inventory, the possibility of future market decline is not great. It is expected that the PP market in East China in the near future may be stable and small market adjustment.

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