Upstream Loss! There May Be A New Round of Supply Contraction in May, And The Polyolefin Rally Will Remain The Same Next Week?

The supply of polyolefins has eased, and there is still resistance in the production and sales of downstream factories

In terms of PE supply, the annual production capacity of PE maintenance equipment is 6.75 million tons this week, a decrease of 1.15 million tons from the previous month. It is expected that the supply will increase slightly next week. In terms of demand, the start of PE downstream agricultural film dropped by 5 percentage points to 35%, the start of packaging increased by 3 percentage points to 58%, and the rest of the start of production was temporarily stable. It is expected that downstream demand will continue to rebound slowly, and in the short term, on-demand procurement will still be the mainstay.

In terms of PP supply, the operating load of domestic PP plants was 80.57% this week, down 2.07 percentage points from the previous week. During the week, the maintenance of PP units such as Dushanzi Petrochemical and Haiguolongyou was newly added. At present, the maintenance units are still relatively concentrated, and the supply is expected to decrease slightly next week. In terms of demand, the start-up of downstream plastic weaving and injection molding companies continued to decline, and the contradiction between market supply and demand remained stalemate. The impact of poor logistics on the downstream still exists, and there is resistance to downstream source procurement and finished product transportation.

Petrochemical inventories fell significantly in the week, and the inventory pressure was acceptable

As of this Friday, the two oil inventories were 760,000 tons, a decrease of 95,000 tons from last Friday, and the decline in inventories of petrochemical companies was more obvious during the week. At present, the petrochemical inventory level is moderate, the destocking operation at the refinery side is relatively smooth, and the inventory in the middle and lower reaches is also at a moderately low position. The inventory structure of the entire industry chain is still reasonable.

There may be a new round of supply contraction in May, and polyolefins may rise next week

The latest data shows that US oil inventories have fallen sharply, providing a strong bottom support for crude oil prices. This week, the refinery profits of the oil-based route were compressed again, and the losses were enlarged. It is now late April. If costs remain high and refinery profits are still in the red, there may be a new round of supply contraction in May, that is, upstream petrochemical plants will continue to suspend production.

Under the support of cost and supply side, the polyolefin market may rise next week, and the price fluctuates repeatedly in the range around 100 points. It is suggested that investors can try to establish long orders in the lower part of the range, and reduce long orders in the upper part of the range. In addition, it is necessary to be cautious in shorting, and it is advisable to have spot protection or other varieties to hedge.