Polypropylene market may oscillate low

The dislocation of polypropylene supply and demand in April triggered a dramatic change in the market. First, the high-melt fiber led the entire PP market to rise continuously, reaching a peak of about 9000 on April 13, then fell to a price of about 7,600 in only 3 days, and then oscillated at 7400-8000. In terms of supply and demand, the possibility of low market volatility is relatively high.

The mainstream price in the East China wire drawing market reached the level of about 7,500, and the decline began to slow down. This price is slightly higher than the average level of 6958 during the year, so the downstream is not buying, and there is less concentrated purchase.

1. Continuously lower production ratio of wire drawing to support the market

The ratio of drawing production is less than 20% for a long time, the ratio of fiber production is continuously higher than 40%, and the demand for drawing is about 30%, and the demand for fiber is about 10%, and the supply and demand are continuously unbalanced. The ratio of drawing output is continuously low, and it is reasonable to respond to strong market support. However, the market price is too high, and the downstream profits are backlogged. Some downstream companies have started to wait and see, reducing the drawing demand. As market prices gradually return to rationality, downstream demand gradually returns to normal.

2. Lower downstream start, weaker demand

In addition to PP non-woven fabrics, plastic knitting, injection molding and BOPP downstream construction all fell. In addition to the substantial increase in raw material prices, the lack of orders also limited the polypropylene downstream industry's construction level. Raw material prices return to rationality, downstream factories abandon cost concerns, and they will produce and sell better, and demand is expected to rise further. However, due to the impact of global health events, the impact of export orders is relatively large, so the degree of demand growth is limited.

3. Wire drawing schedule began to recover gradually

The price of wire drawing and high-melt fiber is still around 4000, which is much higher than the normal level of around 700. Excessive price difference has prompted some petrochemical companies to switch to fiber production, such as Zhenhai Refinery and Fushun Petrochemical. However, Ningbo Fude, Liaotong Chemical and Yuntianhua have switched to wire drawing. Against the background of the sharp drop in fiber prices, it is expected that more and more Of enterprises switch to wire drawing, and the output of wire drawing is about to return to normal.

In addition, I heard that low-priced external sources of goods are about to arrive in Hong Kong, which will intensify market volatility and market prices may fall further. However, as the 05 contract is also close to delivery, it is not possible to exclude the possibility of some companies receiving goods.

Therefore, in summary, the probability of PP low market volatility is relatively large, but it does not rule out the possibility of another wave of upswing. Taking East China as an example, the mainstream of wire drawing may reach 6700-6900 CNY/ton by the end of April.