Since the beginning of this year, the domestic polypropylene market has continued to decline. As of the beginning of June, domestic mainstream transaction prices fell to about 7,000 yuan (ton price, the same below), a month-on-month decrease of 7.3% and a year-on-year decrease of 22%. Under the bearish atmosphere, the inflection point of the polypropylene market emerged in early June, and the market stopped falling and stabilized. And some areas began to rebound slightly by 1%~2%, and the transaction atmosphere turned from cold to warm. The author believes that this market change is mainly due to the promotion of basic benefits such as low-priced replenishment of terminals, a short-term decline in operating rates, and increased support on the cost side. In the short term, the polypropylene market is expected to stabilize and stabilize.
First of all, after the price fell continuously, the terminal replenished the warehouse at a low price. Since June last year, the domestic polypropylene market has basically shown a continuous downward trend. Especially in May this year, under the background of poor economic environment and sluggish demand, the market once again ushered in an accelerated decline. However, this rapid decline has also fully released market risks. Due to the market decline, downstream companies have suppressed their raw material inventories to the lowest level in history. Once terminal demand shows a growth momentum, downstream companies with low inventories will begin to replenish inventory at low prices. For example, the demand for catering and milk tea in summer has increased, driving the demand for some thin-walled injection molding products. The short-term replenishment demand of these terminals has become the main source of power for this round of market stabilization.
Secondly, the operating rate of enterprises has declined in stages. Affected by the recent overhaul of polypropylene enterprises, the supply capacity of products will still decrease in the short term. With the intensive shutdown of petrochemical plants, it is expected that the utilization rate of polypropylene production capacity will drop to about 75% in mid-June, with a weekly drop of 3%. In the context of reduced product supply and low prices, manufacturers began to offer firm quotations, which is also one of the positive factors that have prompted the market to turn warmer in the short term.
Once again, the support on the cost side has also been strengthened. Entering the summer, driven by the production reduction of equipment and the expected improvement of fuel demand in summer, the upstream cost support of oil-based polypropylene is obvious. Although propane and coal-based cost support is loose, it is still stable. In addition, the short-term situation in Russia and Ukraine is difficult to turn around. The peak season in the United States drives demand growth, and the fundamentals continue to improve. In the short term, it is not ruled out that international oil prices may rise, and polypropylene cost support is strong.
On the whole, in the short term, the polypropylene market will stop falling and stabilize. However, with the continuous launch of new production capacity, there is a certain increase in the supply side, and the short-term replenishment behavior should be completed within this month. Will still purchase on demand. Under the support of the cost side and the favorable foundation of the warming transaction atmosphere, it is expected that the polypropylene market outlook will further stabilize and build a bottom, and the polypropylene market is more likely to recover moderately in the second half of the year. (According to the wind)
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