2017 Chinese PM/PMA Market Fluctuated Frequently

Introduction

In 2017, after rising and falling rapidly, the Chinese PM/PMA market was weak and showed a decreasing trend.

Phase One: A Narrow Rise ( Jan-H1 Feb, 2017)

At the beginning of January, 2017, influenced by the hazy weather and the Spring Festival, majority of PM/PMA factories decreased operating rate, and part of units were shut. The supply of PM/PMA became tight in the spot market. However, the downstream users had stocked goods before the Spring Festival, so the trades were modest in downstream market. Furthermore, as the Chinese propylene oxide (PO) price increased continually, which promoted the PM/PMA offers to increase. The negotiation prices increased gradually in the PM/PMA market. From H2 January, with some downstream factories withdrawing the market successively, the demand for PM/PMA became light. However, as the PO price was firm, the PM/PMA market ran on a high level. The Chinese PM price increased to RMB 11,100/mt, which was up 4.72%. The Chinese PMA price increased to RMB 10,100/mt, which was up 5.21%.

Phase Two: Decreased and then Moved Sideways (H2 Feb-Jul, 2017)

One one hand, part of PM/PMA units restarted after the Spring Festival, so the supply of PM/PMA increased. The units in downstream industries started after the Spring Festival. However, influenced by the low temperature and NPC & CPPCC, the demand for PM/PMA increased slowly and the trades were light in the market. On the other hand, the demand for PO was flat after the Spring Festival. So, the PO prices decreased rapidly, which was down RMB 2,000/mt in 20 days. However, the Chinese PM/PMA market decreased slightly. Refer to the PM/PMA market before the Spring Festival, with PO prices increasing greatly, the growth rate of PM/PMA price was limited. So, with the PO prices declined significantly this time, the PM/PMA market just experienced a slight decrease. After March, the PO prices fluctuated, which provided limited guidance to the PM/PMA market. The supply was stable in PM/PMA market and the demand was flat. The trades were thin and the negotiation prices decreased gradually. The PM price was RMB 10,000/mt, which was down 9.91%. PMA price was RMB 9,000/mt, which was down 10.98%.

Phase Three: Reserve V-Shape Trend (Aug-H1 Sep)

In H1 August, the supply of PO was tight and the offers increased continually. Furthermore, part of PM/PMA units took overhaul, which supported the market. The PM/PMA prices rose greatly. Although the downstream users showed resistance to high prices, in order to maintain production, users still needed to purchased. From late August, the PO prices began to decrease. Also, the PM/PMA units restarted, which released the tight supply. The offers of PM/PMA became soft. In general, from mid-August to end of September, the Chinese PM/PMA market increased and then decreased significantly.

Phase Four: Flat Demand and Fluctuate Marginally (Oct-Nov, 2017)

Entering Q4, 2017, influenced by the PO market, the offers of Chinese PM/PMA were stable. However, the downstream demand was hard to increase. The downstream users suffered sales pressure. To maintain sales condition, downstream players operated flexibly. The negotiation prices of Chinese PM/PMA fluctuated in a narrow range.

At the beginning of 2017, the prices of Chinese PM in barrel were in the range of RMB 10,600-12,000/mt in cash. The prices of Chinese PMA in barrel were in the range of RMB 9,600-11,000/mt in cash. In the mid-July, the prices of PM and PMA (in barrel) were in the range of RMB 10,100-10,600/mt and RMB 9,400-9,900/mt in cash respectively. In late August, the Chinese PM prices increased to RMB 12,600-13,400/mt in cash, and the PMA prices climbed to RMB 11,600-12,400/mt in cash. In mid-November, the prices of Chinese PM in barrel were in the range of RMB 11,800-12,400/mt and the PMA prices were in the range of RMB 10,800-11,800/mt in cash. Up to the December 5, the reference prices of Chinese PM in barrel were in the range of RMB 11,600-12,400/mt in cash. The reference prices of Chinese PMA in barrel were in the range of RMB 10,600-11,800/mt in cash.

Forecast

In December, the Chinese PO market will be possible to decrease, which will be hard to support the PM/PMA market. The units of Chinese PM/PMA will operate on a low workload. Moreover, part of raw material units will undergo maintenance, and the output in factories will be modest. The supply will be flat. In December, the demand for PM/PMA will be hard to improve. The downstream users will purchase on a need-to basis. Players will mainly make the deal on the negotiation price. In general, it is predicted that the PM/PMA prices will be possible to ran downwards. Players should pay attention to raw material market and the downstream demand.