Polypropylene And Other Plastic Products Will Be Reduced By 15% in Price! International Oil Prices Plummet, Domestic Chemical Prices Lose Cost Support

May 10, 2023

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Recently, crude oil prices have experienced significant fluctuations, with Brent crude oil futures plummeting by over 10% during the May Day holiday that just passed. In this context, domestic chemical prices have lost cost support and have also declined accordingly. The reporter visited multiple chemical enterprises in the Yangtze River Delta region and learned that the current peak season of the domestic chemical market is not prosperous, and the transaction volume and prices have significantly decreased compared to last year.

Crude oil prices have plummeted, and the prices of chemical products such as polypropylene have decreased by 15% year-on-year

Xie Lvbu is the head of a chemical trade enterprise in Hangzhou, Zhejiang. He told reporters that the May Day holiday has just ended, and the prices of plastic products such as polyethylene and polypropylene have rapidly declined. Originally, the second quarter was a traditional peak season in the plastic market, but downstream customers were not actively picking up goods this year, and transaction prices have decreased by about 15% compared to the same period last year.

Since mid April, international oil prices have been falling all the way, and in May, they have suffered a heavy setback, leading to the loss of cost support for domestic chemical prices.

The reporter learned that the current domestic chemical market is characterized by strong expectations and weak reality, and demand recovery is slow. Chemical factories are generally facing pressure from insufficient new orders and high product inventory, which also suppresses the prices of chemical products.

The reporter learned in the interview that the prices of petrochemical raw materials have remained strong in the past two years. Chen Mingzheng, the head of a large paint company, told reporters that in the past two years, the prices of their company’s main raw materials such as benzene solvents, epoxy resins, and other petrochemical products have been continuously increasing, severely squeezing profits. Recently, the high price of crude oil has fallen, and both downstream application oriented enterprises and upstream chemical enterprises will improve their profitability.

Industry insiders have stated that China’s petrochemical industry is currently in a period of centralized production. With the concentrated production of petrochemical and refining plants in various regions, the expansion of production capacity for polyolefin and other chemical materials is accelerating, and has shifted from being mainly imported to being self-sufficient domestically. At the same time, it is also facing a pattern of oversupply.

Expert analysis shows that the domestic chemical market will continue to experience weak fluctuations in the short term, and when it will usher in a price turning point, attention needs to be paid to the demand recovery situation in the third quarter.