During the National Day holiday, international oil prices soared by nearly 15%, which greatly encouraged the opening of the market after the holiday. At the same time, with the expectation of restocking downstream and the stimulation of petrochemical companies to increase their prices in turn, the PP market welcomed the “good start” market. It can be seen from the table that although the overall increase is not large, basically ranging from 200-300 yuan / ton, the continuous momentum makes the market atmosphere extremely comfortable.
However, there are still different voices in the market as to whether this wave of gains can continue!
bearish side
In January and September, the domestic PP output was 2.4454 million tons, an increase of 0.95% month-on-month and a year-on-year increase of 3.65%. In the early stage, the parking devices were started one after another, and there were not many new maintenance devices, and the capacity utilization rate rose to 78.23%. In addition, new production capacity continues to be released. Ningbo Daxie Petrochemical (300,000 tons/year) has already entered the market with qualified products. In the later stage, Zhongjing Petrochemical (60+600,000 tons/year) and Jingbo Petrochemical (40+200,000 tons/year) It also intends to put into production this quarter, and the market supply pressure will further increase.
2. The start-up load of downstream enterprises has slowly picked up, and it has improved from the previous month, reaching 81.50%, but it is still weaker than previous years. Many industry insiders said that the current terminal orders are mostly based on rigid demand, and the cost side drives the upstream products of the industrial chain to rise, which will inevitably inhibit the recovery of downstream demand.
bullish
1. OPEC+ decided to reduce its average daily crude oil production by 2 million barrels from November 2022, and the demand for heating and industrial demand in autumn and winter will be strong, which will form a strong support for international crude oil prices. Many analysts believe that , the price operation center will remain at 90-110 US dollars / barrel for a period of time in the future.
2. The willingness of petrochemical companies to support prices is clear. Taking Sinopec East China PP as an example, after returning to the market during the National Day holiday, it has connected two general adjustments to the factory quotations. The impact of its own inventory, according to data, the inventory accumulated during the holiday period was 235,000 tons to 810,000 tons, but it was still lower than the same period in previous years.
Overall, the background of the peak season and the game of increasing supply are still fierce, and the continuity of the spot market is facing a greater challenge. However, the 20th National Congress of the Communist Party of China is about to be held. The domestic policy aspect may be positive, and the support of oil prices, monomers and other aspects is acceptable. The possibility of the price going down seems to be limited, and it is expected that the market will gradually return to normal, with fluctuations in the range.
