Chinese Polypropylene Market outlook in 2020
In 2020, the domestic polypropylene (PP) market will become more volatile. It can be seen from the chart that the market price has gone through three stages, first falling and then rising sharply. After falling sharply to the median level, it began to fluctuate in a long narrow range, and then the fourth Fall after rising quarterly.
First of all, in the first quarter, the domestic PP market continued to show a downward trend in January. During the Spring Festival holiday, after the stocking was over, downstream companies suspended work during the holiday, affected by poor logistics and traffic, the inventory of merchants and petrochemical plants increased greatly, market transactions stagnated, and the transaction center was slightly It fell by 300-700 yuan/ton. The domestic PP market price also fell in February, and the sudden epidemic affected the start of downstream operations. Before the inflection point of the epidemic, downstream enterprises in various regions were insufficient to resume work, petrochemical inventories were not digested smoothly, and prices mainly fell. Entering March, the overall market trend has not changed, and the following behaviors are still the main players. From the comparison of regional valuations, there is still a drop ranging from 300-500 yuan/ton. The inventories of the two oils once reached historical highs, so merchants and petrochemical plants on the market have lowered their offers in order to facilitate transactions.
In the second quarter, the domestic PP market prices soared and plummeted in April, and the overall market was out of a roller coaster ride. With the support of national and regional policies, enterprises in various regions have resumed work and production, and demand for PP has recovered. The ex-factory price of petrochemicals has been continuously adjusted. Even the polypropylene market is undergoing looting, closing, and frantically rising prices. With the increase in prices, the terminal cannot withstand excessively high prices, and it is more resistant to high-priced transactions. Some merchants have made profit taking and the prices have been sharply increased. Fall back. The domestic PP market prices fluctuated upward in May. On-market transactions were relatively active, petrochemical inventories declined smoothly, overall downstream demand picked up slightly, and on-site transactions were fair. In June, the domestic PP market mainly fluctuated at a high level, and the overall market trading atmosphere showed a stalemate and confrontation pattern, with prices mainly fluctuating within a narrow range. The mainstream of wire drawing in the market is mostly concentrated around 7700-7900 yuan/ton.
In the third quarter, domestic PP market prices continued to fluctuate at a high level in July. The price adjustment range was around 50-200 yuan/ton. However, the downstream resistance to the high level gradually increased and the transaction was blocked. The downstream just needed to cover the position at a low level, and the terminal transaction was average. In August, market transactions were flat, with obvious wait-and-see. In September, the domestic PP market price surged and oscillated at a high level. Driven by the continued rise in futures and the good destocking of petrochemicals, petrochemical prices followed closely and the center of gravity moved up rapidly. However, as prices rose, downstream profits were severely compressed. The high price conflict is obvious. The mainstream of wire drawing in the market is mostly around 7980-8200 RMB/ton.
In the fourth quarter, the domestic PP market price was at a high level in October. After the National Day holiday, there is a strong demand for replenishment in the downstream, coupled with the rise in futures and the acquisition of goods by downstream factories, the quoted price on the market has risen sharply, and the downstream demand is still strong. In November, the overall price center of the domestic PP market moved significantly upwards, the inquiring atmosphere in the market was active, and downstream demand was very strong. With the release of macroeconomic benefits and the surge in futures, the market set sail again and prices soared. The domestic PP market price fluctuated downward in December. High spot shipments were blocked, and petrochemical companies' prices continued to drop. Merchants actively made profits. However, new orders from downstream were gradually reduced, and negative news such as production restrictions and power cuts continued to be suppressed in North China and East China. The industry is cautiously bearish, low prices are frequently seen, and the pressure of imbalance between supply and demand on the market is gradually highlighted. In the second half of the year, the overall market decline rate has accelerated slightly. Merchants are actively selling profit, and downstream demand continues to be weak, and terminal transactions are light. The mainstream wire drawing in the market is mostly around 7950-8250 RMB/ton.
In the past five years, China’s polypropylene production capacity has continued to increase year by year, with an average growth rate of 9.30%. 2020 is a big year for production, which will accelerate the growth of production capacity; as of December 2020, the domestic polypropylene production capacity has reached 28.82 million tons/year, an increase of 3.8 million tons/year compared with 2019, an increase of 15.19%. In 2021, installations will be put into operation one after another. It is expected that the relatively certain increase in new production capacity in 2021 will be 4.5 million tons/year.
