On Monday, April 13, according to the data monitored by the business association, the polypropylene (PP) index rose vertically today. The ex factory price of large petrochemical plants in China has been increased by leaps and bounds, and the traders have to cancel the quotation from time to time and raise the price again. The spot price of domestic polypropylene market has skyrocketed, and polypropylene is a rare commodity for a while. The search army has the momentum to kill the general without asking about the price area. PP futures rose again, prompting the market speculation atmosphere. As of the afternoon of April 13, the main offer price of T30S (wire drawing) from domestic manufacturers and traders was about 8533.33 yuan / ton. Film material, plastic injection, etc. rise synchronously, fiber material can not go down. Today’s rally continued last weekend’s rally, even more than last weekend’s rally. It rose 16.89%, surpassing the 14.36% increase of the whole week last week.
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Turning point
Rome wasn’t built in a day, so it wasn’t built overnight. Especially in the background of the weakening demand of China’s plastic industry and the rapid growth of polypropylene production capacity, polypropylene (PP) can have a recent increase is really a blessing. In this article, the polypropylene analyst of the business club will take you to analyze the reasons.
The turning point of the market appeared on April 6 last week. According to the monitoring data of the business club’s bulk list, PP spot market stabilized from April 1-13 after the adjustment of shocks, and rose sharply since April 6, ending the three consecutive months of decline. Today’s gains were particularly encouraging, with a reference to 16.89% per ton of single day spot price increases. This subtle inflection point, which has a high synchronous rate with the international crude oil price fluctuation, makes us have reason to believe that the starting point of the industrial chain – crude oil, whose rise is the heavyweight fuse of this polypropylene market.
Upstream conduction
On April 2, peripheral news said that Saudi Arabia and Russia are expected to reach the impact of a production reduction agreement. WTI and Brent both rose by more than 25%, the biggest daily increase on record. On April 9, the OPEC + special meeting ended. Its production reduction was less than the market expectation, and the oil price corrected. Russian President Vladimir Putin, U.S. President trump and Saudi Arabia’s King Salman called on Tuesday to reach an oil production reduction agreement between OPEC and other non OPEC oil producing countries, Xinhua reported Sunday. Kremlin website released a statement the same day, Putin, Trump and Salman in the call to support the production reduction agreement. Since early April, oil prices have increased by 11.13%. The plasticizing industry mostly depends on the top cost end crude oil. In recent years, crude oil has soared, and crude oil and polypropylene as futures have strong financial attributes, so the market transmission of this rise is sharp and rapid.
In addition, the direct upstream propylene trend of PP is also relatively rapid in the near future. Many traders adjusted their gains over the weekend, and it is reported that some enterprises have increased nearly 100%. Last month, Shandong propylene price fell in shock, with a monthly decline of more than 15%. After the Qing Dynasty, the price of propylene increased steadily, and the market transaction has soared to 8000-12000 yuan / ton, and some manufacturers have suspended the quotation. Market transactions have soared by 8000-12000 yuan / ton, and some manufacturers even suspended their offers. The upstream production reduction is good, the downstream procurement enthusiasm is good and the raw materials are in short supply, and the participants have a positive attitude. It can be seen from the industrial chain relationship of polypropylene that the recent sharp rise of propylene has played a direct role in conducting the sharp rise of polypropylene. The rising trend of crude oil and propylene near and far cost end is the cost side factor of this soaring market of polypropylene.
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Futures urges
When it comes to futures, it could be an important driver of today’s surge in spot prices. On the 10th, the 05 contract was up 398 points, up and closing. Pp09 opened sharply on the 13th, and pp05 rose again. The delivery of the contract is coming soon, investors follow the speculation and the market is immersed in a speculation atmosphere. And the position of 100000 hands is more than twice of that of the same period. Whether the 05 contract can be successfully delivered will be the main concern. On the news side, in addition to the above-mentioned international crude oil price, the demand gap of propylene brought by the current public health events is also a big driver. In the near future, futures have a strong impact on spot prices, which is the financial factor of this rally.
Mask crisis
Analysis of the current polypropylene skyrocketing, naturally can not bypass the rapid growth of prevention and control material demand. Since the Spring Festival, there are about 30000 new mask factories in China. The demand of fiber material and melt blown material increases rapidly. The surge in demand has caught polypropylene enterprises and the society by surprise, and petrochemical enterprises have turned to produce varieties in short supply. Before the outbreak of this social public health event, the proportion of fiber material production was about 35%. At present, the production of fiber material has reached a historical high level, and melt blown polypropylene has also experienced a significant expansion. Even so, some brand products still have a large gap. The inclination of variety demand and production scheduling also resulted in the decrease of production proportion of CO injection plastics and drawing materials. Last year, the production capacity of PP drawing materials accounted for about 33%. Recently, a large number of enterprises changed production, which caused the production capacity of drawing materials to fall to around 22%. As the mainstream material in the market, drawing material has strong rigid demand and large demand. According to Longzhong’s follow-up, the short-term production scheduling mismatch may lead to a shortage of wire drawing materials in the later stage. “Mask crisis” can be said to be the demand side factor driving up the price of polypropylene.
Forecast for future market
PP analysts of business club think: during the current special period, the situation of overseas health prevention and control is still unclear, and the short-term decline of demand for polypropylene fiber materials and spray melt materials at home and abroad is less likely. There is still room to improve the load of downstream factories such as wire drawing and copolymerization, but this year’s maintenance peak season is approaching, and the start-up situation of the production line is complex, which needs further observation. At the same time, due to the mismatching of production capacity, some materials are facing the expectation of weakening supply. In addition, the cost end support is consistent, so the overall price of polypropylene is expected to remain high in the short term.
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