Polyolefins: After the interest rate cut boots land, can the rally in the futures and spot markets continue?

Polyolefins: After the interest rate cut boots land, can the rally in the futures and spot markets continue?

On December 21, there were rumors in the market that a new round of deposit rate cuts was about to land. On the 22nd, the interest rate of large certificates of deposit of many banks was lowered, with a maximum reduction of 30BP, which was only more than 3 months after the last round of deposit interest rate reduction. Through interest rate cuts, while releasing market liquidity, it also provides a bullish theme for the rise of the commodity market. On the 22nd, the main domestic futures contracts were red in a large area, the container transportation index (European line) closed the daily limit, up 14.99%, the alumina closed the daily limit, up 6.99%, caustic soda and glass rose by more than 4%, semi coke and soda ash rose by nearly 4%, lithium carbonate rose by more than 3%, iron ore rose by 3%, semi coke rose by nearly 3%, and methanol and red dates rose by more than 2%.

On the other hand, in terms of today's polyolefin market performance, first of all, in terms of futures, the main L and PP contracts continued to refresh their highs since December, while the L05 contracts once broke through the previous round of rebound highs. With the overall decline of commodities in the afternoon, the L and PP 05 contracts showed a downward trend of reducing positions, but they closed above the daily moving average at the end of the day, and closed four consecutive positives. On the spot side, linear and PP wire drawing continued to rise during the day. In terms of price, the mainstream price of domestic linear ranged from 8150-8600 yuan/ton, up 20-80 yuan/ton from yesterday, and the domestic mainstream price of wire drawing ranged from 7450-7650 yuan/ton, up from 20-70 yuan/ton from yesterday. Under the rise in futures, the continuous upward adjustment of coal companies' factories and the lack of buying, traders' sentiment is still strong. At the same time, the downstream buying part followed up, taking linear East China as an example, some real orders were reached between 8150-8200 of linear resources, and the overall transaction performance was acceptable.

As for whether the market can continue to rise in the future, from a fundamental point of view:

Supply side: maintenance is reduced, but the supply of saleable goods is tight at the end of the month

In terms of PE, Maoming Petrochemical low-pressure (350,000 tons/year) and Zhongtian Hechuang high-pressure (250,000 tons/year) units will be shut down next week, but Zhejiang Petrochemical low-pressure (300,000 tons/year) and Lanhua Laoquanmi (60,000 tons/year), which were shutdown in the early stage, will resume operation, and the supply is expected to grow. In terms of PP, only the first line of Shanghai Petrochemical (100,000 tons/year), the first and second lines of Maoming Petrochemical (470,000 tons/year) are planned to be parked next week, and the second line of Yanshan Petrochemical (70,000 tons/year), the second line of Fujian United (220,000 tons/year), and the first line of Jinneng Chemical (450,000 tons/year) will resume work next week, and the supply side of PP will continue to increase slightly next week. However, next week is the end of the month, and with the completion of the sales task of contract households, the saleable resources in the market will be tightened.

On the demand side, rigid demand has slowly weakened, and there has been no high-price resistance sentiment for the time being

It is difficult to increase new orders in major downstream industries and show a gradual slowdown trend, and the demand for raw materials is slowly weakening. However, at present, the price of raw materials has moved steadily upward, and there is no obvious high price resistance in the downstream. It coincides with the three-day holiday on New Year's Day, and we pay attention to the terminal procurement situation before the end of the month.

Petrochemical policy: inventory fell to a low level, and the willingness to raise prices was strong

At the end of the month, with the cooperation of futures, the petrochemical industry accelerated its destocking, and the current petrochemical inventory and sales pressure is not for the time being. In the early stage, coal companies actively raised prices, and from the 22nd, individual regions tried to raise the ex-factory price by about 50-100 yuan/ton, and the cost support continued to increase. It is expected that there will be no major negative pressure, and the new price of polyolefin petrochemical next month will be mainly stable and price increase.

Raw materials: raw materials are firm and rising, and be alert to the risk of change

In the short term, we should focus on whether the rally can continue about crude. In the absence of conflict escalation around the Red Sea, and its own fundamentals are still weak, the short-term upside of crude oil is limited, and we should pay attention to whether there is a risk of a decline in the short term. The supply of coal is gradually increasing, the sales situation in the origin is normal, and the price at the pit mouth is mainly stable.

On the whole, although there was supply-side pressure on the polyolefin market at the end of the month and the beginning of the month, the cost and month-end factors still supported the market performance. However, the current market rally is not only driven by the rise in raw materials caused by the Red Sea transportation issue, but also boosted by macro bullishness. After the interest rate cut boots landed, the short-term supply increase good news was effective, and the market entered the stage of "watching the after-effect". Emotional overheating has led to the daily limit of some commodities, and follow-up attention to the trend of funds to beware of the risk of correction after the ebb of sentiment.