According to the Commodity Market Analysis System of Shengyi Society, the domestic PP market in May was consolidating and operating, with some brand products experiencing narrow price reductions. As of May 31st, the mainstream offer price for wire drawing by domestic producers and traders is around 7393.33 yuan/ton, a decrease of -1.18% compared to the price level at the beginning of May.
price trend
In terms of raw materials:
From April to early May, the US tariff policy was implemented, with tariff rates constantly changing and increasing to unprecedented heights. The tariff trade war launched by Trump has had a huge impact on the global economy. Crude oil, as a heavily affected area, has experienced a sharp drop in prices. With the release of many positive signals such as the suspension of tariffs during the mid May China US talks, crude oil prices have continued to rebound. In addition, the tense geopolitical situation in the Middle East and Eastern Europe has increased the risk of crude oil supply, and prices have remained firm. At the same time, the decoupling of domestic propane trade is expected to gradually be lifted, and the cost pressure on PDH manufacturing enterprises may decrease in the future, but the differentiation of demand will hinder the growth rate. There is a certain degree of loose supply in the propylene sector, coupled with average digestion speed, resulting in price fluctuations and downward adjustments. Overall, the prices of PP raw materials fluctuated in May, with mixed ups and downs, providing moderate support for PP costs.
Supply side:
In May, the load of domestic PP enterprises remained stable with small fluctuations, rising and then falling back, and the market supply remained generally abundant. Overall, the current industry’s overall load level has increased by 1% to around 77% compared to the end of April, and the weekly average total output of about 750000 tons has also remained flat. The capacity loss caused by the maintenance plan of interval enterprises has been basically smoothed out by the restart of enterprises such as Lanzhou Petrochemical. At the same time, the new production capacity of 1.4 million tons in the next quarter is approaching, and there is a clear expectation of loose supply in the future. The total domestic inventory has narrowly decreased to below 820000 tons, but remains at a high level. Overall, there is still some suppression on the spot price of PP by the supply side.
In terms of demand:
In May, the demand for PP continued to be weak, and on-site trading gradually entered the traditional off-season. The goods were basically ready before the Dragon Boat Festival, and the market remained weak and rigid. The consumption level of plastic weaving terminal enterprises has returned to the off-season level ahead of schedule. With the passing of the small peak in material usage, the release speed of PP demand in fields such as construction and agriculture has slowed down. The news of the temporary suspension of tariffs between China and the United States in the early stage stimulated market sentiment, and consumption briefly increased. At the end of the month, the impact has cooled down, and although the export resistance of downstream PP products in China has decreased, the incremental delivery of export orders still needs time. At the same time, there is still supply pressure in the industry, and inventory still needs to be cleared, offsetting some positive factors. The current buyers are cautious in their purchasing operations to maintain production, leaning towards scattered small orders, and the market’s new order transactions are returning to a flat state. Overall, the performance of PP demand side in May was average.
Future forecast
In May, the domestic PP market price consolidation was weak. From a fundamental perspective, fluctuations in upstream raw material prices have provided average overall support for PP. The industry has abundant supply, inventory continues to be digested, and consumption has entered the off-season level. At present, the positive sentiment of macroeconomic policies is being digested, and the market is returning to supply-demand dominance. It is expected that the PP market will continue to consolidate in early June, and it is recommended to closely monitor the new production situation in the industry.
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