The domestic propylene market will now fall after a short shock

On the second weekend of April 2020, the domestic propylene market experienced a period of historic market volatility. The mainstream price of Shandong propylene market skyrocketed from 5900-6000 CNY/ton on April 10 to 8000 CNY/ton on April 12, with a price difference of up to 2050 CNY/ton, an increase of 34.5%.

The reasons for the explosion of PROPYLENE are as follows:

Macroscopic view: As of April 12, the cumulative number of new diagnoses of new coronary pneumonia has reached 1696087 people, and international public health problems have intensified, resulting in a surge in demand for medical supplies. At the international crude oil level, the global oil-producing countries have reached a common reduction in production, maintain the public knowledge of the supply and demand balance of the oil market, and have obtained two important negotiations. Currently, OPEC + is still continuing negotiations. Next Monday, April 13th, due to the Easter holiday, the European crude oil market will continue to be closed, adding uncertainty to the market.

Supply side: At the night of No. 10 Jingbo Petrochemical in Shandong area, two sets of gas separation devices were temporarily stopped due to a sudden failure. The supply of propylene on the 11th was slightly affected, and the device returned to normal in the evening. After the restart of the waxing plant in Shenyang in the Northeast, qualified propylene has not yet been produced. It is expected that normal supply will resume on April 13.

Demand side: Due to the global epidemic situation, the supply of masks is in short supply. The demand for polypropylene materials for polypropylene masks has increased sharply. Domestic petrochemical companies have actively converted to high-melt fiber materials. The output of other types of materials has shrunk significantly. Significant reduction in production. During the same period, many small meltblown line devices were launched in the market. The demand for high-melt fiber materials increased sharply, and the price of fiber materials rose rapidly, which further drove the polypropylene market to rise, and other brands of products are also short-term supply. The polypropylene powder market in Shandong has soared from 7100-10000 CNY/ton on the 10th to 13000-15000 CNY/ton on the 12th. The start-up load of polypropylene production enterprises has increased rapidly, the demand for raw material propylene has soared, and the price of propylene has been strongly driven up.

But behind the explosion in propylene, the profits of other downstream products have entered a comprehensive loss. As of the date of the draft, based on the price of Shandong propylene market value of 8,000 CNY/ton, the profit loss of downstream products has intensified, the profit of propylene oxide is -543 CNY/ton, the profit of n-butanol is 1680 CNY/ton, and the profit of octanol is 1780 yuan. / Ton, Acrylonitrile profit -4200 CNY/ton.

Facing the situation of increasing profit loss, many downstream enterprises suspended the purchase of propylene during the weekend, and production has also taken measures to reduce the burden or even stop. Propylene oxide: Jinling plant reduced the load to 50%, Xinyue reduced the load to 50-6%, Shi Dashenghua planned to stop. Butanol: Hualu Hengsheng has been shut down for maintenance on the 9th, Luxi Chemicals has temporarily maintained one line of production, Jianlan plant has been shut down, and Lihuayi Refining & Chemical has lowered its burden. Acrylonitrile: Haili lowers its negative operation, and it is expected to be stored and parked. Acetonephenol: Lihua Yiwei dropped far to 60%.

And how the market will develop after the skyrocketing has become a question for practitioners to think about. At present, the buying momentum in the propylene market has declined significantly, and the polypropylene powder market has also stabilized and consolidated. As far as the future market is concerned, currently, affected by the rising cost of propylene, some of the downstream products of propylene offer passively upward, driving the center of gravity of the entire industrial chain upward.

Although the main downstream polypropylene has shifted to the stage of shock consolidation, but the production of wire drawing materials is compressed, the supply is still tight, and the probability of quickly sliding to the pre-holiday level is not high. And the demand loss caused by other downstream devices such as negative load parking must eventually be paid for by propylene. Recently, the domestic propylene market will decline after a short period of shock. It is to return to the range of 5,000-6,000 CNY/ton following the plunge, or to fall back slightly to the level of 6,000-7,000.