[Plastic] Polypropylene market peaks and falls

Cost support collapsed, export dividends diminished

In the spring of March, the polypropylene market fell into a cold, after 3 months of continuous rise, it began to peak and fall back.

"The fall in crude oil has caused the cost of polypropylene to collapse, coupled with the realization of new production capacity, the supply and demand side has not improved significantly.

Loose cost support

Since the end of March last year, international crude oil prices have risen sharply.

Looking back on the past year, the price of WTI crude oil has soared from less than US$30/barrel to above US$60/barrel, more than doubled, which has pushed the center of gravity of downstream chemical products to a significant upward shift, becoming a unilateral increase in the polypropylene market.

However, Chen Zhixiang believes that taking into account the continuing OPEC+ production cuts and the fact that global crude oil supplies are tight, international crude oil prices do not have the conditions for a deep drop in the short term.

Diminishing export dividends

Good export is also one of the factors in the early stage of the unilateral rise of polypropylene.

"In 2021, the export volume of polypropylene will increase significantly.

First of all, the extreme cold weather in North America after the Spring Festival led to the shutdown of a large number of installations, and the later the Middle East ushered in a larger area of ​​installations and repairs, which led to a tightening of overseas regional supply, triggering price increases, and opening up export arbitrage for domestic polypropylene.

At present, the arbitrage space of polypropylene has been reduced, and the supply of foreign markets is facing the expected recovery in the later period, and the export dividend is gradually weakening.

Redemption of new capacity

"Considering the negative factors such as the continuous increase in domestic production capacity and the low enthusiasm for downstream receiving goods, the follow-up polypropylene supply and demand fundamentals will be weak.

2021 is still a year of significant increase in polypropylene production capacity, including Formosa Plastics Ningbo 600,000 tons/year, East China Energy Phase III 800,000 tons/year, Zhejiang Petrochemical Phase II 900,000 tons/year and other installations, which are expected to have 7 million The new production capacity of about ton/year is gradually realized.

The demand side is not optimistic.

The loose supply and demand relationship is also reflected in the industry inventory.

In summary, international crude oil prices have fallen sharply, cost support has been weak, and new production capacity has yet to be fulfilled.

(Keyword: Polypropylene)