Plastic: The Market May Be Repeated, And The Short Space Can Gradually Stop The Profit

Feb 08, 2023

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CORE VIEW

The macro sentiment of the market eased, the downstream construction was slow after the holiday, the petrochemical inventory accumulated significantly, and the plastics fell back after the surge.

The short-term market is in a vacuum period in which demand needs to be verified, and supply pressure has not yet concentrated. According to the rhythm of the past year, the downstream operating rate will gradually rise in the near future. Two weeks after the holiday, there may be a round of just needed goods in the downstream. There is some support below the short-term price, and the market trend may be repeated. The short-term short selling strategy can gradually stop the surplus.

However, after the completion of short-term downstream replenishment, the market contradiction point will still return to the confirmation and falsification of the strong demand expectation. The supply side increase in the past 23 years is more certain. At present, the inventory pressure of the industrial chain has increased. If the future demand increment cannot digest the supply increment, the market inventory pressure will continue to increase. If the demand is strong and the expectation is falsified, the market will still usher in a medium-term correction.

Risk points: the macro environment exceeds expectations, raw material prices exceed expectations, and supply exceeds expectations

Logical Trace

01

Price difference:

The basis is slightly stronger, but still weak

As of February 3, the plastic base difference was – 29 yuan/ton, and the 5-9 price difference was 37 yuan/ton. Last week, the plastic price rose and fell back, and the basis strengthened slightly, but the spot transaction was poor, and the basis was still weak. The recovery of construction starts and the addition of new production capacity, the market basis pressure in the future will still be large, and the probability of large basis will remain weak. However, the short-term basis converges, and the price may be repeated.

02

Demand:

After the holiday, downstream production resumed and the bottom of the construction began to climb slowly

Last week, the start of agricultural film production increased by 10% to 30%, packaging production increased by 4% to 41%, monofilament production increased by 5% to 30%, film production increased by 10% to 35%, hollow production increased by 4% to 29%, and pipe production increased by 8% to 28%. In terms of agricultural film, the demand has not yet fully recovered, and the industry has started to rise slowly. In the future, the peak season of agricultural film production is coming, and the demand for agricultural film may have a significant increase. In terms of pipes, medium and large factories have resumed production after the festival. Most of the small and medium-sized factories started work after the Lantern Festival, and the starting load has gradually increased.

03

Supply:

The new production capacity is put into operation and the start of operation is rising, and the supply pressure is gradually increasing

Last week, PE production enterprises started work at 86.58%, up 0.23% on a month-on-week basis. The maintenance loss is 29800 tons, with a decrease of 4500 tons from the week to month, and the maintenance loss is at a low level. It is preliminarily estimated that the maintenance loss this week will be 25800 tons, a decrease of 4000 tons on a month-on-month basis, and the supply is expected to increase. With the production of Guangdong Petrochemical and Hainan Refining and Chemical, and the restart of Wanhua Chemical (600309) and other units, the supply pressure will gradually increase, and the domestic capacity utilization rate may rise to more than 90% in February.

04

Import:

After the holiday, the number of customs clearance in Hong Kong increased, and the number of imports hanging upside down increased slightly

Last week, the price in the domestic market fell, but the supply in the external market was tight, coupled with the better demand in the external market, the foreign offer went up, and the internal and external price difference went up. After the holiday, most businesses returned to the market one after another. Downstream demand was slowly recovering, and the market transaction atmosphere was relatively light. With the fading of the holiday influence factors, the import volume to the port for customs clearance increased, but the total amount to the port was not large, and the port inventory pressure was not large.

05

Inventory:

Industrial chain inventory continues to accumulate

As of February 3, the inventory of sample production enterprises, port inventory and sample traders showed an increasing trend on a month-on-month basis. During the Spring Festival, there is a lot of accumulated inventory, the sales after the holiday are not smooth, and the inventory of production enterprises is accumulated, but the overall pressure is not prominent, which conforms to the historical data operation law. Port inventory, import to port is less, but the transaction is weak in the week, the recovery of downstream is limited, and the inventory is accumulated slightly. In terms of traders, the downstream recovery was slow, less than expected, and the shipment speed slowed down. In addition to the implementation of the petrochemical plan, the inventory accumulation was obvious.