Polypropylene: The Market Is Weak Due To The Demand Drag

May 27, 2022

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Weak price trend

In April, the domestic polypropylene market was dominated by downward shocks. According to the statistics of zhuochuang information, taking East China wire drawing as an example, the price fell from 8800-8900 yuan / ton at the beginning of the month to 8600-8750 yuan / ton at present, down 200-150 yuan / ton.

However, according to the analysis of the main factors of the recent price decline, the recovery of demand is less than expected. Under the drag of demand for a long time, the market weakness pattern is difficult to change.

From the perspective of the overall supply of polypropylene, the pressure at the supply end is not large in the near future, mainly due to the concentrated maintenance of the device. Since the beginning of March, polypropylene maintenance devices have increased significantly. At the same time, under the pressure of high inventory and high cost, most enterprises began to adjust load production. According to the statistics of zhuochuang information, at present, some enterprises have begun to resume normal load production, but the maintenance devices are still concentrated. It can be seen from the output loss data that the output loss of the unit has gradually increased since the beginning of March and reached a high point in early April. Although it has declined in the short term, it has increased significantly year-on-year. In the short term, due to the intensive maintenance of the device, the short-term pressure on the supply side is OK, which still supports the market.

At the same time, in terms of regional supply circulation, affected by the poor supply circulation, the shortage of supply in some regions is obvious, which supports the regional prices to a certain extent.

In the near future, the demand is gradually weak. From the perspective of the construction in the main downstream fields, the construction level of the plastic weaving industry has fallen by about 10%, the construction level of the BOPP industry has fallen by 13% and the injection molding industry has fallen by about 6% since the beginning of March.

In the near future, downstream processing and labor costs have increased and profits have been compressed. At the same time, affected by factors such as poor logistics, some downstream factories have difficulty in purchasing raw materials, and the new orders are less than expected. At present, the inventory of raw materials in the downstream is mainly for rigid demand, and the willingness to enter the market is limited. The short-term downstream cautious mentality and difficulties are still expected to be difficult to ease, and it is expected that the demand is still difficult to support the market.

On the whole, the market showed an obvious pattern of weakening supply and demand in April. In the short term, the maintenance devices are still relatively concentrated, and it is expected that there will be investment in new maintenance devices in the later stage, the investment of new capacity will be postponed, and the supply side is expected to continue to weaken. However, from the demand side, the downstream mentality is not optimistic. Some factories still have plans to further reduce the load, and the demand is weak. And the weakening of demand for a long time also has a significant impact on the mentality of polypropylene spot market. Overall, the market is expected to focus on the downward trend under the expectation of weak demand. However, due to the relatively acceptable supply and demand side and the lack of support on the cost side, the downward space is limited and the market is mainly weak and volatile. At present, the main focus of the market is also focused on the recovery of demand. The improvement of demand is expected to become the inflection point of the market. It is suggested to pay close attention to it.