According to the Commodity Market Analysis System of Shengyi Society, the domestic PP market fluctuated after a decline in early July, and prices of some brand products were lowered. As of July 8th, the mainstream offer price for wire drawing by domestic manufacturers and traders is around 7376.67 yuan/ton, a decrease of -1.09% compared to the price level at the beginning of July.
price trend
In terms of raw materials:
At the beginning of July, the geopolitical situation in the Middle East eased, and market concerns about the risk of crude oil supply disruptions eased. At the same time, the OPEC+production increase agreement has been implemented, putting pressure on international oil prices. The domestic propane sector followed the decline of crude oil, falling at a high level. The cost support of PDH manufacturing enterprises has fallen, and the propylene sector has also entered a rapid decline channel. Overall, the prices of PP raw materials in early July provided weak support for costs.
Supply side:
At the beginning of July, the load of domestic PP enterprises was reduced, but the market supply remained abundant. Overall, industry maintenance has been relatively concentrated in recent times, with the overall load level dropping from 80% at the end of last month to around 77%, and the weekly average total output decreasing to 770000 tons. However, the domestic inventory digestion situation is not good, rising to nearly 800000 tons. In the interval, middling coal will stop for 45 days on July 1. Later, Jingbo, Dalian Petrochemical and other enterprises have plans to reduce the load, and the expected contraction of supply will partially alleviate the supply pressure. Overall, the supply side provided moderate support for PP spot prices in early July. However, including the new production capacity of Zhenhai Line 4 and Yulong Line 4 that have already been put into operation, as well as Yulong Petrochemical and other enterprises in the fourth quarter, a total of 1.4 million tons of new production capacity has been put into operation, severely limiting the long-term supply pattern.
In terms of demand:
In early July, the demand side of PP continued to be weak, and on-site trading gradually entered the traditional off-season. Merchants have hardly seen any advance stocking operations, and the on-site situation remains in a state of urgent need, with a focus on on-demand use. In terms of plastic weaving, the consumption level of terminal enterprises is already at the off-season level, and downstream PP enterprises in China are struggling to start production. Materials used in construction, agriculture and other fields are also at a low level and flat. On site new orders tend to be scattered small orders and contract deliveries, with flat liquidity of supply and slow release of PP demand. In the context of weak export and domestic demand, the demand side of PP has not provided strong support for spot prices.
Future forecast
In early July, the domestic PP market prices fluctuated after falling. Fundamentally speaking, the overall weakness of upstream raw materials has led to a decline in overall support for PP. The industry load has been reduced, and there is still room for narrowing supply in the future, but inventory has increased and supply remains abundant. Consumption is at a low season level. The current supply-demand contradiction and the decrease in cost value are combined, and the mentality of industry players is bearish. It is expected that the PP market will continue to be weak in the short term.
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