The prices of PE, PP, etc. rose in turn

Recently, PE, PP and other chemicals generally "increased", and some products increased their prices by several thousand yuan in less than a month. The rainy and snowy weather in Shandong—“increased”, a Japanese chemical plant caught fire—“increased”, and a Korean factory Overhaul-"Increase"... When talking about the recent domestic chemical product market, the most frequently spoken word by the industry insiders interviewed is "Increase", which also makes people feel the tension in this round of price increases. Market sentiment.

After the “Golden Nine and Silver Ten”, November and December were originally the traditional off-season for chemical product sales. Why did the price rise again? Can the market for chemical products continue to be in the off-season? What kind of economic code is hidden behind this?

The upstream and downstream of the olefin industry chain generally rise, and the price transmission is smooth

The latest monitoring data jointly released by the China Economic Prosperity Monitoring Center of the National Bureau of Statistics and Zhuo Chuang Information show that in mid-November, among the 10 chemical products included in the monitoring scope, the prices of 9 chemical products have increased compared with the end of October, and 5 The price increase of styrene is more than 11%. Among them, the price of styrene (first grade) has the highest increase, reaching 33.75%.

"Since November, our company's styrene price has risen from more than 6,000 yuan per ton to more than 9,000 yuan. Although the current price has fallen, it is still at the level of 8,000 yuan." The sales person in charge of a chemical company in Shandong told, "Our chemical industry Product price increases are mainly driven by downstream chemicals, and the prices of our downstream chemicals are all rising."

According to reports, the current round of chemical product price increases have two notable features: one is that olefin products represented by ethylene, propylene, butadiene, etc. have risen sharply; the second is that the rise of products closer to the terminal location is greater than that of the raw materials. Products located closer to the market have risen, that is to say, products that are more inclined to the downstream of the industrial chain have risen higher.

Take styrene as an example. Its upstream products are ethylene and benzene, and its downstream products are mainly insulation materials and plastic products. According to data jointly released by the China Economic Prosperity Monitoring Center of the National Bureau of Statistics and Zhuochuang, the price increase of pure benzene, which is also included in the monitoring range, is only half of the increase of styrene over the same period, which is 16.54%.

In the downstream link of styrene, plastic products belong to the light industry category. The reporter learned from the China National Light Industry Council that in the first nine months of this year, the operating income of the plastics industry fell by 3.9% year-on-year, while profits were increasing by 17.3%. At present, the price of plastic products is indeed still in the stage of "rising" upstream and "higher ship" downstream.

"This round of chemical market price increase has obvious uniformity, and the phenomenon of general rise in the upstream and downstream of the industrial chain is more obvious, which shows that the price transmission is relatively smooth." Cao Yang said.

Supply is "surprised" by demand recovery

To explore the reasons behind this price increase, the higher prices of upstream bulk raw materials are one of them.
"This round of increase in chemical product prices is related to the market's expectations of relatively stable oil prices." Cao Yang believes.

"The international oil price has risen to more than US$40 per barrel, which has formed a basically stable support for petrochemical products." said Zhu Fang, director of the market and information department of the China Petroleum and Chemical Industry Federation, but the most important factor still comes from supply and demand. Level.

From the perspective of supply, according to data from the National Bureau of Statistics, from June 2019 to October 2020, industrial producer prices (PPI) have always been below zero year-on-year, and have been in a deflationary range for several months. "Prior to this, the prices of many important chemical products have been hovering at a low level, reducing the willingness of enterprises to produce." Zhu Fang said that some domestic chemical products still need to be imported.

In addition, it has been learned from the China Petrochemical Federation that in order to standardize the foundation of the development of the chemical industry and increase the concentration of the industry, many places are promoting the "entry of chemical companies". This may also have a certain impact on the production of enterprises. According to industry insiders, it may sometimes take a year or two for companies to move into the chemical park.

From the perspective of demand, the new crown pneumonia epidemic has been basically under control in my country since June, and the resumption of work and production has been steadily progressing, which has driven the gradual recovery of demand. "In the four months from June to September, the price index of chemical products rebounded slowly, and the rise accelerated in October and November." Cao Yang said that due to the spread of foreign epidemics, domestic epidemics have repeated themselves. Although business operations and market demand are recovering, In the previous four months, everyone was generally bearish on business operations. Most companies were "paying by quantity" and purchasing orders only after receiving orders. Low inventory operations were the main focus.

According to reports, entering October, as the economy continues to improve, market confidence is established, coupled with the launch of demand during the National Day and Mid-Autumn Festival, foreign Christmas season purchases, and the superposition of state assistance to enterprises, promotion of consumption, and promotion of automobiles to the countryside, etc. The policy has been implemented, market demand has increased significantly, and companies have concentrated their purchases, but the inventory and production preparations in multiple links in the industry chain are insufficient, which has caused the pressure for companies to complete orders to double, and the prices of chemical products have risen in turn, breaking the seasonal law.

From the perspective of the three types of olefin products that are rising this round, in addition to the ethylene mentioned above, butadiene is mainly the raw material for synthetic rubber and tires; the downstream of propylene is mainly melt blown cloth (mask material) and other various materials. Class textile materials, disinfectant, etc. These three types of raw materials are widely used in daily necessities, home appliances, automobiles, tires, packaging, medical care, mobile phones, real estate and other fields related to the national economy and people's livelihood. Many downstream products are also hot-selling products exported during the epidemic.

"The good market performance of olefin products also reflects the current positive trend of China's processing industry." Cao Yang said.

It is worth noting that the reporter learned from a number of industry insiders that during the price increase, the market is deeply concerned about supply and therefore reacts to relevant news more sensitively. For example, the rain and snow in major production areas such as Shandong in November, and the accidents or overhauls of companies in Japan and South Korea will all trigger market concerns about further tightening of supply and push up prices. At the same time, the speculation in the futures market has further aggravated market panic and price fluctuations.

The off-season is not short, the market is still or continues

From the later stage, it is understood that due to the rapid rise of some varieties, there has been a callback recently, and the possibility of continuing the callback cannot be ruled out in the later period.

"For example, plasticizers, octanols, acetone, etc., the previous increase was too high, and there will be a callback process." Cao Yang said, but at least this year, the fundamentals supporting the improvement of the chemical industry are still strong.

The leading indicator data released by the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics and Purchasing on November 30 show that in November, China’s Manufacturing Purchasing Manager Index (PMI), non-manufacturing business activity index and comprehensive PMI output index They were 52.1%, 56.4%, and 55.7%, respectively. The three major indexes all hit new highs during the year, indicating that the economic recovery is progressing steadily.

In terms of different industries, in November, 90% of the manufacturing industry has been in the expansion range. The production index and new order index of industries closely related to the chemical industry, such as medicine, electrical machinery and equipment, computer communication electronic equipment, and instrumentation are all higher than 56% .

At the same time, the pulling effect of exports is still increasing. The new export orders index in the manufacturing PMI sub-index in November was 0.5 percentage points higher than that in October, which was at the highest point of the year and was in the expansion range for three consecutive months.

"Based on the current economic fundamentals, we believe that the current low-season sales of chemical products are expected to continue before the Spring Festival. Jin Yiteng, chief analyst of the Kaiyuan Securities chemical team, said that standing at the current point, continue to be firmly optimistic on Prices, low inventory varieties and the leading chemical industry.

PE and PP surges followed closely, and even hit a record high! Downstream announced to counter high prices! Carry out weekends!

If you think that PP and PE have not risen much, that would be a big mistake! During the month, the two oil inventories operated at a low level, supporting the positive development of the market.

Throughout the whole year of 2020, the domestic PP market shows a "first decline-then rise-fall-rise" market. From the price point of view, drawing and copolymerization have increased to varying degrees, but drawing materials have the most obvious rise. In April and May, the PP drawing price was about 6,100 CNY/ton, and the current price has reached 9,100 CNY/ton;

In mid-November, the polyethylene market also began a counterattack performance, in which the high-pressure price set a new high, the mainstream price of the price was 12500-12900 CNY/ton, an increase of 1750-1950 CNY/ton from the beginning of the month, and the linear mainstream price was 8500-8800 yuan /Ton, up 300-800 CNY/ton from the beginning of the month.

The entire upstream raw material market is enjoying the rise, but this trend of one price per day has been unbearable by downstream manufacturers. Although the market price has begun to adjust, the price is still at a high level.