the plastic futures market is in an upward channel and will continue its positive trend next month

Aug 25, 2023

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According to the Commodity Market Analysis System of the Business Society, it is expected that the spot prices of plastic futures and three materials will strengthen simultaneously in the near future. On the macro level, the short-term internal and external economic environment has been partially eased, with a decrease in crude oil supply and improved energy demand supporting the remote cost of plastics. At present, the construction of aggregation enterprises is relatively high and stable, and the supply side is stable.

In addition, with the recent introduction of multiple policies in China to stimulate consumption of automobiles and real estate, the consumption of plastic futures has rebounded. As the traditional peak season for superplastics approaches, the demand for terminal enterprises is gradually heating up. In summary, the plastic futures market is currently in an upward trend due to various positive factors such as high costs, rising demand, and futures boost. It is expected that plastic futures will continue this positive trend as they officially enter the “Golden Nine Silver Ten” period next month.

Recently, due to the approaching traditional peak season in the plastic industry, the market has started to heat up, and various products have seen a rise, with plastic futures rising at the same time. According to the Commodity Market Analysis System of the Business Society, as of August 23, the average spot price of each product has increased from high to low in the cycle, followed by PVC (8.26%), PP (wire drawing) (4.09%), and LLDPE (2.80%).

In the month from the end of July to the present, the plastic industry has been dominated by Lido. On the macro level, inflation in the United States has cooled beyond expectations, the necessity for the Federal Reserve to raise interest rates has decreased, and concerns about economic recession have eased. In terms of cost, the seasonal peak demand from refineries and OPEC production cuts in oil producing countries have led to a strengthening of international crude oil prices. At the same time, the stocking activities of downstream plastic enterprises have gradually increased, consumer follow-up has improved, and market momentum has increased. Under the dual support of rebounding consumption and high costs, the prices of plastic futures and three materials have shown a fluctuating upward trend.

PVC

According to the Commodity Market Analysis System of the Business Society, the average price of PVC carbide SG5 was 6176 yuan/ton on August 23, an increase of 8.26% month on month. The domestic PVC industry was supported by policies and cost in the early stage, leading to a significant increase in confidence in the spot market and an upward trend in prices over the past month. Although the current spot price has risen to a high level, it has triggered some buyers’ wait-and-see sentiment, overall market trading is improving, downstream procurement remains on demand, and on-site inquiry activities are frequent. In terms of upstream calcium carbide, due to unstable industry operations and insufficient PVC delivery in some regions, suppliers have been operating rapidly, which has a significant boosting effect on PVC. The futures market is also in an upward channel.

On August 23, PVC2309 closed at 6255, with a settlement price of 6282, providing sufficient support for spot prices. Business Society predicts that in the short term, the PVC market will be more favorable with more guidance, and prices may continue to be stronger in consolidation and operation.

PP

At the end of July, the domestic polypropylene market took on the early repair market, and the price position gradually rose from a three-year low. According to the Commodity Market Analysis System of Business Society, the average price of PP wire drawing material increased by 4.09% month on month on August 23rd. In terms of supply, the overall load of the domestic PP industry has increased from 74% a month ago to around 80% currently.

There is ample supply of goods on site, but the planned new production capacity has not yet been fully put into operation. The total inventory level of domestic PP is still acceptable. The operating rates of plastic weaving and BOPP, the main terminal enterprises of PP, have remained stable and slightly fluctuating, with current rates of around 41% and 63% respectively. The on-site consumption has maintained a healthy level. The strengthening of upstream propylene prices has a strong support effect on PP. In the past 30 days, futures have also been fluctuating and strengthening. On the 23rd, PP2309 closed at 7656, with a settlement price of 7686, which has a relatively positive impact on spot prices. Currently, polypropylene has been strongly boosted by the cost side, and the market supply and demand performance is balanced. It is expected that the PP market may continue to operate in a stronger direction.