The market for epichlorohydrin remained stable this week. As of August 22nd, the benchmark price of epichlorohydrin in Shengyi Society was 7987.50 yuan/ton, an increase of 0.16% compared to the beginning of this month (7975.00 yuan/ton).

Price influencing factors:

On the raw material side: Recently, the price of propylene in the market has risen, and the price of liquid chlorine has been weakly stable. In addition, some liquid chlorine enterprises have undergone equipment maintenance due to malfunctions, resulting in a decrease in liquid chlorine exports. The cost of epichlorohydrin has been under pressure, and prices have remained firm in multiple aspects. Raw material glycerol is steadily rising, but overall there is still cost pressure. According to the market analysis system of Shengyi Society, as of August 22, the benchmark price of propylene in Shengyi Society was 6890.75 yuan/ton, a decrease of -2.72% compared to the beginning of this month (7083.25 yuan/ton).

Equipment situation: The operating rate of the epichlorohydrin industry was 50-60% within the week.

Downstream demand side: The consolidation and operation of the downstream epoxy resin market is the main focus, with a production capacity utilization rate of over 50%. There is sufficient inventory, and some factories are temporarily shutting down to adjust the load of their equipment under inventory pressure. Downstream terminal inquiries are not active, cautious procurement of raw materials, insufficient follow-up on new orders, and weak signing volume.

Market forecast: Analysts from Shengyi Society believe that there is still cost pressure, insufficient follow-up of downstream new orders, cautious procurement of raw materials, and the main demand for transactions. It is expected that the epoxy chloropropane market will operate weakly and steadily in the short term, and more attention should be paid to changes in raw material prices.

According to the Commodity Market Analysis System of Shengyi Society, the PP market continued its weak consolidation trend in mid August, with prices of various brand products experiencing a narrow decline. As of the afternoon of August 21st, the mainstream offer price for wire drawing by domestic producers and traders was around 7757.14 yuan/ton, with a decrease of -0.91% compared to the beginning of the month.

Price trend

In terms of raw materials:

The news that the International Energy Agency’s monthly report predicts that global oil demand growth will continue to slow down to below 1 million barrels per day in the next two years has dampened market sentiment. Despite the unexpected decrease in US inventory and the escalating tensions in the Middle East, the market remained stagnant and weak in the middle of the month. The circulation speed of propylene supply is average, and the overall price has declined. The demand for propane is also weak due to pessimistic downstream purchasing sentiment, and there is room for price looseness. Overall, the recent support for PP from various raw materials has been average.

Supply side:

In mid August, the load level of domestic PP enterprises continued the previous pattern of large stability and small fluctuations. Recently, there has been a mutual occurrence of equipment maintenance and resumption of work in enterprises, resulting in a flat supply volume. The current industry load is about 75%, and there is still news of new equipment being put into operation at the end of the month, with expectations of an increase in future production levels. At the same time, the overall inventory of two polyolefin oils fluctuated and increased, and the factory pricing of enterprises was narrowly lowered. Overall, the current on-site supply of goods remains abundant, with supply pressure steadily increasing.

In terms of demand:

In mid August, there was no improvement in the demand side of PP, and the overall load of terminal enterprises remained stable at a low level. Among them, the consumption of woven bags such as fertilizers and cement is at a low season level, and the operating rate of plastic weaving enterprises is low, with weak enthusiasm for replenishing inventory. The follow-up of downstream product orders by film companies is limited, and replenishment operations revolve around weak demand. The comprehensive operating rate of injection molding enterprises has also fallen at a low level. The trading atmosphere in the downstream market of PP is generally average, with limited new orders and mostly pre delivery contracts. Although the traditional peak season of “Golden September” is approaching, the market lacks guidance signals in the short term, and the demand side has poor support for the PP market.

Future forecast

Recently, there has been a narrow decline in the domestic PP market prices. From a fundamental perspective, the overall support for PP from upstream raw materials is weak and stagnant, and the off-season market on the demand side is difficult to change. At the same time, there is a trend of increasing supply and demand in the future. The current sentiment of spot trading has not yet been activated by the peak demand season next month, and new orders on the exchange remain at the low-end position. Overall, it is unlikely that there will be a breakthrough in the PP market in the short term, and it may mainly focus on consolidation and operation.

According to the Commodity Market Analysis System of Shengyi Society, the domestic polyester staple fiber market continued to decline on August 20th. The average price of 1.4D * 38mm in mainstream factories in Jiangsu and Zhejiang was 7501 yuan/ton, a decrease of 1.53% from the previous trading day. The general quotation was between 7450-7550 yuan/ton, a decrease of about 100 yuan/ton. The weak raw material prices have dragged down, and downstream purchases are cautious according to demand, resulting in a strong bearish atmosphere in the overall short fiber market.

The United States is pushing for a ceasefire agreement to end the Gaza conflict, and concerns about weak demand have put pressure on the market. International oil prices have plummeted, and on August 19th, the settlement price of the main WTI crude oil futures contract in the United States was $74.37 per barrel, a decrease of $2.38 or 3.0%. The settlement price of the main Brent crude oil futures contract was $77.66 per barrel, a decrease of $2.02 or 2.5%. PTA followed the decline in crude oil prices, coupled with expectations of accumulated inventory, and prices continued to fall. On August 20th, the average PTA market price in East China was 5357 yuan/ton, a decrease of 1.63% from the previous trading day.

Downstream terminal demand is sluggish, and some finished product inventory has accumulated, resulting in sporadic purchases of raw materials. At present, the purchasing enthusiasm of terminal enterprises is limited, and they plan to purchase raw materials at a low price after digesting the inventory.

Business analysts believe that there is still significant uncertainty in the geopolitical situation, and international crude oil is operating weakly. The PTA industry has a high operating rate of over 86%, and the supply of goods is still abundant, so the cost guidance has slowed down. Downstream is in the traditional off-season and cautious in raw material procurement. It is expected that the price of polyester staple fiber will continue to decline in the short term.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of LLDPE (7042) was 8318 yuan/ton on August 9th, and the average price was 8296 yuan/ton on August 16th, with a price drop of 0.26% during this period.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of LDPE (2426H) was 10116 yuan/ton on August 9th, and the average price was 10100 yuan/ton on August 16th, with a price drop of 0.16% during this period.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of HDPE (5000S) was 8137 yuan/ton on August 9th, and the average price was 8137 yuan/ton on August 16th, during which the quotation was temporarily stable.

Recently, there has been a narrow and weak adjustment in polyethylene prices. International oil prices are showing an upward trend, with some support on the cost side. In the second quarter, the spring inspection equipment is relatively concentrated, and in the third quarter, with the gradual restart of polyethylene maintenance equipment, there is an expected increase in the supply side. According to statistics, as of August 15th, the total production of polyethylene by domestic enterprises was 555900 tons, an increase of 14200 tons compared to the previous period; In terms of demand, the demand for greenhouse film has entered a reserve period, and downstream production rates have rebounded, with orders gradually following up; At the same time, the operating rate of packaging film enterprises has slightly increased, and market purchases are mainly made at low prices, with traders offering small discounts.

In August, polyethylene futures were mainly downgraded due to weak market conditions, which suppressed spot prices.

There is an expectation of an increase on the supply side; Demand side consumption is expected to increase, boosted by consumption during the Mid Autumn Festival and National Day holidays in August and September, resulting in a double increase in supply and demand. It is expected that polyethylene may rise slightly, but the upward adjustment space may be limited.

According to the Commodity Market Analysis System of Shengyi Society, the domestic PTA market fluctuated and adjusted weakly this week (August 12-16). The average spot price of PTA in East China was 5566 yuan/ton, a decrease of 0.59% from the beginning of the week. At the beginning of the week, the main supplier announced a maintenance plan for the PTA plant, which, combined with the rise in crude oil prices, boosted the PTA market. But as crude oil fell and demand remained weak, PTA prices fell. With the rebound of crude oil on Friday, PTA prices showed a slight rebound. Looking at the future market:

In terms of supply, the current operating rate of the PTA industry in China is around 86%, maintaining a high level, and the overall supply of goods is still abundant.

In the crude oil market, the trend of US oil destocking is not as expected, which limits the support for the oil market. However, we still need to be vigilant about changes in the geopolitical situation, and oil prices may remain stable. Recently, the overall supply capacity of PX in Asia has been at a high level, coupled with the continued shutdown plans of some PTA plants in China, resulting in a consolidation of PX prices at a low level.

Downstream polyester production is around 83%, and there are currently no plans for large-scale polyester plants to shut down or reduce production in the short term, resulting in weak demand for PTA. Terminal demand is still in the off-season, and finished product inventory is still mainly accumulated. We are cautious about raw material procurement, focusing on essential needs. Currently, the operating rate in Jiangsu and Zhejiang remains around 63%.

Business analysts believe that PTA has abundant supply and weak demand, and the fundamentals lack highlights. In addition, the cost side support has slowed down, and under the lack of positive guidance in the market, PTA prices may fluctuate weakly.