According to the Commodity Market Analysis System of Shengyi Society, the PP market continued its weak consolidation trend in mid August, with prices of various brand products experiencing a narrow decline. As of the afternoon of August 21st, the mainstream offer price for wire drawing by domestic producers and traders was around 7757.14 yuan/ton, with a decrease of -0.91% compared to the beginning of the month.
Price trend
In terms of raw materials:
The news that the International Energy Agency’s monthly report predicts that global oil demand growth will continue to slow down to below 1 million barrels per day in the next two years has dampened market sentiment. Despite the unexpected decrease in US inventory and the escalating tensions in the Middle East, the market remained stagnant and weak in the middle of the month. The circulation speed of propylene supply is average, and the overall price has declined. The demand for propane is also weak due to pessimistic downstream purchasing sentiment, and there is room for price looseness. Overall, the recent support for PP from various raw materials has been average.
Supply side:
In mid August, the load level of domestic PP enterprises continued the previous pattern of large stability and small fluctuations. Recently, there has been a mutual occurrence of equipment maintenance and resumption of work in enterprises, resulting in a flat supply volume. The current industry load is about 75%, and there is still news of new equipment being put into operation at the end of the month, with expectations of an increase in future production levels. At the same time, the overall inventory of two polyolefin oils fluctuated and increased, and the factory pricing of enterprises was narrowly lowered. Overall, the current on-site supply of goods remains abundant, with supply pressure steadily increasing.
In terms of demand:
In mid August, there was no improvement in the demand side of PP, and the overall load of terminal enterprises remained stable at a low level. Among them, the consumption of woven bags such as fertilizers and cement is at a low season level, and the operating rate of plastic weaving enterprises is low, with weak enthusiasm for replenishing inventory. The follow-up of downstream product orders by film companies is limited, and replenishment operations revolve around weak demand. The comprehensive operating rate of injection molding enterprises has also fallen at a low level. The trading atmosphere in the downstream market of PP is generally average, with limited new orders and mostly pre delivery contracts. Although the traditional peak season of “Golden September” is approaching, the market lacks guidance signals in the short term, and the demand side has poor support for the PP market.
Future forecast
Recently, there has been a narrow decline in the domestic PP market prices. From a fundamental perspective, the overall support for PP from upstream raw materials is weak and stagnant, and the off-season market on the demand side is difficult to change. At the same time, there is a trend of increasing supply and demand in the future. The current sentiment of spot trading has not yet been activated by the peak demand season next month, and new orders on the exchange remain at the low-end position. Overall, it is unlikely that there will be a breakthrough in the PP market in the short term, and it may mainly focus on consolidation and operation.
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