The weakening of market demand is difficult to change the weak PP pattern

The fourth quarter is the low season for traditional downstream consumption. As market demand weakens, inventory will continue to accumulate. Looking ahead, PP is expected to maintain a weak operation in the core range of 7,500-7800 CNY/ton, and maintain the idea of shorting every callback.

Limited equipment overhaul

Judging from the supply-demand balance sheet, the fundamentals of the PP market in the first half of the year were under tight supply and demand. From January to August, the cumulative domestic PP output was about 16.4026 million tons, an increase of 12.55% over the same period last year. From the perspective of apparent consumption data, the apparent consumption from January to August increased by 13.32% compared with last year. Among them, the apparent consumption in May, June, and August increased by more than 20% year-on-year. In addition to the increase in domestic production, the substantial increase in imports was also the reason for the faster increase in apparent consumption.

Polyolefin industry inventories are at a low level, but due to the fall in futures prices, the market is pessimistic, and agents try to postpone the ordering time. Last week, the two oil and petrochemical inventories continued to accumulate, but the midstream social inventory declined, and the downstream factory raw material inventory also declined slightly. In terms of PP, as of September 11, domestic petrochemical companies' PP inventories increased by 17.55% from September 4, and petrochemical inventories continued to rise. Last week, the domestic polypropylene plant operating load was 92.87%, an increase of 0.89 percentage points from the previous week, and the petrochemical supply increased. The price of polypropylene dropped sharply last week, and the spot demand in the market decreased significantly. Traders mostly focused on selling existing sources. The supply of goods to Hong Kong in East China and South China increased slightly, and this week will usher in concentrated arrivals in Hong Kong.

is currently in the off-season for equipment maintenance, and the loss of equipment maintenance is limited. As far as last week, the domestic polypropylene equipment maintenance loss was about 39,100 tons, a decrease of 11% compared with the previous week. At present, there are few devices that are planned for maintenance and are in the maintenance season. At the same time, new production devices such as the first line of Zhongke Refinery have been put into production and sales, Bora Petrochemical has entered the trial production stage, and the second phase of the Quanzhou refinery is about to start up. As the new production devices are operating stably , The supply side still has great growth expectations.

In terms of demand, the growth of fiber materials, transparent materials, thin-wall injection molding and other categories of PP is driven by the increase in demand for epidemic prevention materials, daily necessities, and takeaways. The current operating rate has gradually returned to normal levels, and the pulling effect of PP is limited. In the early stage, the operating rate of the injection molding industry during the peak season based on the golden nine and the silver ten increased significantly, the drawing schedule was squeezed, and the price difference between injection molding and drawing was gradually expanding. At present, the demand for injection molding is weak, and the drawing schedule is gradually increasing, and the subsequent price difference is expected to narrow.

The operating load has increased significantly

my country’s polypropylene plant overhaul loss was about 222,300 tons in August. It is estimated that my country’s polypropylene plant overhaul loss in September will be about 133,700 tons, a decrease of 39.86% from the 222,000 tons in August. Most of the maintenance equipment has resumed production in August, and Datang Duolun, Zhongyuan Petrochemical and Zhejiang Petrochemical plan to start operations in September. There is no plan to shut down the equipment for maintenance next month. It is expected that the loss of my country's polypropylene equipment will continue to decrease in September.

In terms of production switching, upstream petrochemical and some coal companies have switched to non-standard copolymer materials in the early stage. The injection molding schedule has increased in the early stage, and the drawing schedule has been maintained at about 30%. The price difference between copolymerization and drawing has widened, and the market supply is in a loose state. In terms of demand substitution, the price of powder has fallen, but it still maintains a certain price difference with propylene monomer. Currently, the profit of powder is fair and manufacturers are more active in production. In addition, some devices resumed operation in the early stage, and the start-up load increased significantly. At present, the profit of the plastic woven industry is meager and conflicts with high-priced sources. The increase in the operating rate of powder will drive the price gap between pellets and powder to widen. The powder is more cost-effective. Plastic woven manufacturers will increase the purchase of powder and reduce the number of pellets, resulting in The reduction in the purchase of pellets forms a substitute for pellets, which is bad for the PP disk surface.

On the whole, short-term polypropylene may enter an oscillating consolidation period of 7500-7800 CNY/ton. In the medium and long term, on the one hand, the midstream and downstream are now going to the warehouse instead of restocking after the pre-holiday replenishment, and petrochemical inventories are now accumulating; on the other hand, although the downstream industries have started to increase slightly, there is a demand for stocking before the festival. However, the accumulated order volume of BOPP companies has been relatively sufficient recently. On the whole, the weak pattern of polypropylene is difficult to change.