1. PM/PMA Price Analysis
In H1, 2017, the PM/PMA markets fluctuated within a narrow range. The PM/PMA peak prices in H1, 2017 were RMB 11,100/mt and RMB 10,100/mt respectively (around Feb 15), while the PM/PMA bottom prices in H1, 2017 were RMB 10,000/mt (H2 April-late Jun) and RMB 9,000/mt (late Jun) respectively. The PM average price in East China was RMB 10,475/mt, which was up 3.41% from H2, 2016 or 18.25% from H1,2016. The PMA average price was RMB 9,548/mt, which was up 2.92% from H2, 2016 or 21.82% from H1, 2016.
Phase One: The PM/PMA markets increased slightly from January to H1 February, 2017. Firstly, many PM/PMA factories reduced operating rate and part of factories started units maintenance. The supply of PM/PMA was tight in the spot market. However, the factories stock was up, and the downstream market was modest. Secondly, propylene oxide (PO) price continued increasing and factories quotations followed the up trend with the support of production cost. As a result, the negotiation prices increased gradually. Thirdly, in H2 January, the downstream factories stopped selling goods to the market. The PM/PMA basic purchases became thin. However, PM/PMA market was still in a high level, as the PO price was firm.
Phase Two: The PM/PMA markets decreased slightly from H2 February to H1 March, 2017. The units in factories restarted after Spring Festival, and the supply increased. Firstly, the units in downstream factories began to work. However, influenced by low temperature and NPC&CPPCC, the demand for PM/PMA rose slowly and the PM/PMA markets were weak. Secondly, the supply-demand of PO was unbalanced. The PO price decreased dramatically. The cumulative decline was RMB 2,000/mt within 20 days. In general, PM/PMA markets decreased slightly. When the PO prices increased or decreased greatly, the PM/PMA price was limited.
Phase Three: The PM/PMA prices fluctuated downward from H2
, March to late June, as the PO prices fluctuated frequently. The support of production cost was limited to PM/PMA market, and the overall supply was flat. The demand for PM/PMA was low and the PM/PMA market was light. The players were bearish about the market and the mainstream negotiation price fluctuated downward.
2. Supply of PM/PMA
The PM/PMA operating rate was flat, and few factories stopped producing or were in a low operating rate. According to statistics, supply of PM in Chinese market was around 161kt, while Chinese PMA overall supply was 132kt.
3. Demand for PM/PMA
Part of coating factories planned to transform influenced by the environment protection policies in 2017. However, PM/PMA are used as the raw material of cosolvent and coalescents in coating industry. So increasing coating output has limited effect on PM/PMA output.
PM/PMA markets will fluctuate within a narrow range. Firstly, in supply side, the operating rate will be normal, and units in few factories will be shut or undergo maintenance. The supply of PM/PMA will be good. Secondly, in demand side, the PM/PMA off season is coming in Q3, 2017. Players will be bearish about the downstream market. However, September and October are the traditional peak seasons of PM/PMA. Thirdly, in raw material side, the PO prices will fluctuate frequently and change rate will be high. In general, it is predicted that the PM/PMA market will be range-bound and the overall PM/PMA price will follow the PO price.
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