According to the Commodity Market Analysis System of Shengyi Society, the PP market continued to consolidate weakly in early August, with prices of various brand products fluctuating narrowly. As of the afternoon of August 6th, the mainstream offer price for wire drawing by domestic producers and traders was around 7807.14 yuan/ton, with a weekly increase or decrease of -0.55%.

Price trend

In terms of raw materials:

At the end of last month, the international crude oil market experienced frequent fluctuations, which affected market confidence and led to a decline in prices. Due to the unexpected continuous decline in US crude oil inventories and the escalating tensions in the Middle East, many industry players are bullish on the future. At the same time, after the previous price loosening, there was trading volume, and OPEC+’s stance on reducing production was firm. The expected rise in international oil prices is favorable for PP. The flow rate of downstream propylene sources is generally average, and prices have fluctuated and adjusted overall. In terms of propane, due to the rise in liquefied gas prices, propane has been pulled up and strengthened, while PDH production costs have improved. Overall, there has been a slight improvement in the support for PP from various raw materials recently.

Supply side:

At the beginning of August, the load level of domestic PP enterprises reached an average of over 70% of the previous operating level. Recently, there have been fewer short repair messages compared to resumption of work, leading to an expected increase in supply. The current industry load is around 75%. The production level is generally stable, the inventory of wire drawing materials has increased, and the factory pricing of enterprises has been narrowly lowered. At present, the on-site supply of goods remains abundant, and the supply pressure is stable with some increase.

In terms of demand:

At the beginning of 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 and narrow, with weak enthusiasm for replenishing inventory. Due to the high raw material prices and slow cost transfer, the direction of membrane enterprises has resulted in low profit margins, leading to replenishment operations centered around essential needs. 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. 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 comprehensive support of upstream raw materials for PP has slightly rebounded, 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. In August, there is a demand for moving warehouses and changing months in the market, which activates the entry of funds and drives the basis to strengthen. Although some spot trading sentiment has been activated, there is poor trading on the market, with new orders trading around the low-end position, resulting in significant resistance to price increases. Overall, it is expected that the PP market will continue to operate weakly in the short term.

According to the Commodity Market Analysis System of Shengyi Society, the overall trend of mixed xylene market has been declining recently (7.26-8.5). On August 26th, the benchmark price of mixed xylene was 7520 yuan/ton, a decrease of 3.09% from 7760 yuan/ton on July 26th. The overall market for mixed xylene in this cycle has declined, but there are differences in the magnitude of price adjustments, with a weekly drop of 120-150 yuan/ton. As of August 5th, the mainstream price range for xylene in the South China market in the morning was 7600-7700 yuan/ton. The overall decline in the crude oil market during the week has dragged down the mentality of the spot market, and market quotes have generally followed suit. On the demand side, due to the decline in market quotations, there is a demand for bargain hunting in downstream areas, and bargain hunting transactions have occurred in various regions. Market negotiations have improved compared to the previous period.

Cost aspect: Due to the escalating geopolitical tensions, investors are concerned about the escalation of the Middle East conflict; The significant decrease in US crude oil inventories has provided support for oil prices. As of August 2nd, international crude oil futures have fallen. The settlement price of the main contract for WTI crude oil futures in the United States was $73.52 per barrel, a decrease of $2.79 or 3.7%. The settlement price of the main Brent crude oil futures contract was $76.81 per barrel, a decrease of $2.71 or 3.4%. The crude oil analyst of Shengyi Society believes that in the short term, the situation facing crude oil is very complex, and crude oil may intensify its volatility. At present, it is necessary to pay attention to further developments in the Middle East situation, as the tense situation may continue to push up the risk premium of crude oil. At the same time, the expectation of the Federal Reserve cutting interest rates has also brought certain benefits to demand, and oil prices may continue to seek upward space. In the medium to long term, the supply uncertainty in the oil market is increasing, especially with the upcoming US presidential election. If the Republican Party wins, it may have a more profound impact on the oil market, and US crude oil production may be subject to policy increases. The future game of crude oil supply and demand may seek a rebalancing.

Supply side: As of August 5th, Sinopec’s xylene quotations have generally decreased this week. Currently, the company is operating normally, with stable production and sales of equipment. The company’s quotations remain unchanged from the previous day. Among them, the East China Company quoted 7550 yuan/ton, the North China Company quoted 7450 yuan/ton, the South China Company quoted 7500-7600 yuan/ton, and the Central China Company quoted 7550 yuan/ton.

Demand side: Phthalic anhydride and p-xylene markets continue to decline

According to the Commodity Market Analysis System of Shengyi Society, the phthalic anhydride market continued to decline this week. As of August 5th, the phthalic anhydride market in Shandong Province, China, had a downward trend, and downstream factories maintained their essential procurement. High end transactions were hindered, and the mainstream for on-site ortho benzene source negotiations was between 7600-7800 yuan/ton, a decrease of 100 yuan/ton compared to the same period last week; The mainstream price for naphthalene based source negotiations is 7350-7500 yuan/ton, a decrease of 50-100 yuan/ton compared to the same period last week. The price of raw material ortho benzene is temporarily stable, while the downstream plasticizer market is fluctuating and falling. The operation of on-site merchants’ equipment is stable, and the sales situation is average.

On August 5th, Sinopec Sales Company implemented a price of 8500 yuan/ton for xylene, with prices in East China, North China, Central China, and South China all implementing this price. Yangzi Petrochemical, Zhenhai Petrochemical and other facilities are operating stably and sales are normal. As of August 2nd, CFR China’s closing price was 1005.33 US dollars/ton, a decrease of 3.34 US dollars/ton from last week.

On Friday (August 2nd), the Asian xylene market closed down, with FOB Korea closing at $869-871/ton in August, a decrease of $7/ton; In August, CFR China closed at $904 per ton, a decrease of $3 per ton.

Market forecast: Limited support in the crude oil market, low oil prices dragging down market sentiment, and currently insufficient cost support. The downstream procurement demand on the supply side is still acceptable in the near future, and most refineries are actively shipping. The inventory in the factory is stable with a slight decrease. But with the subsequent commencement of some facilities, there may be negative factors on the supply side. The recent performance on the demand side is still acceptable, but it may be difficult to sustain in the future. Overall, the xylene market is mixed with negative and positive factors, and it is expected that the price range will mainly fluctuate in the short term. In the future, the focus will be on the impact of the resumption of xylene production on the market supply side.

According to the Commodity Market Analysis System of Shengyi Society, from July 29th to August 2nd, the domestic ethanol price fell from 6012 yuan/ton to 6000 yuan/ton, with a price drop of 0.21% during the period and a year-on-year decline of 9.60%. The demand side continues to be sluggish, factory prices are falling to stimulate shipments, downstream purchasing power is limited, and the ethanol market is running weakly.

In terms of cost, the domestic corn market prices are stable but relatively weak, and traders’ enthusiasm for shipment has increased, gradually accepting sales. However, downstream purchasing attitudes are cautious, maintaining on-demand procurement, and the market volume of goods is not large. There are few purchasing entities in the port, the arrival volume remains low, the demand for loading is not high, and traders are mainly slow to reduce inventory. The cost of ethanol is influenced by bearish factors.

On the supply side, there are significant differences in the operating rates of production enterprises in different regions, and the ethanol supply side is influenced by favorable factors.

Demand side, Baijiu consumption off-season; The purchase volume of anhydrous methyl ethyl ester has decreased; The utilization rate of ethyl acetate production capacity has decreased, and it is expected to reduce the purchase volume of general grade ethanol. Short term ethanol demand is influenced by bearish factors.

In the future market forecast, the negative impact of cost is expected, while the market supply remains abundant, resulting in overall shipping pressure. The ethanol analyst from Shengyi Society predicts that the short-term domestic ethanol market will be mainly dominated by weak consolidation.

The price of phthalic anhydride slightly fell in July

According to the Commodity Market Analysis System of Shengyi Society, the price of phthalic anhydride raw material OX2024 has been steadily increasing. The price of phthalic anhydride first rose and then fell in 2024, with a slight decrease in July. As of July 31st, OX quoted 8500 yuan/ton, a continuous increase of 11.84% compared to the beginning of the year; The price of phthalic anhydride is 8000 yuan/ton, which has fluctuated and increased by 4.40% compared to the beginning of the year. The price increase of phthalic anhydride in 2024 is much lower than that of OX. Under stable supply, strong cost support, and poor demand growth are the main factors contributing to the weak rise in phthalic anhydride prices. In the past 24 years, the plasticizer market has been weak, and the export of phthalic anhydride has been restricted, resulting in poor demand growth for phthalic anhydride.

Main export destinations of phthalic anhydride in 2023

According to data from the General Administration of Customs, the total export volume of phthalic anhydride in China in 2023 is about 131900 tons, of which 34800 tons are exported to India, accounting for 26.42% of the total export volume. India is the largest export destination; Exported 17500 tons to Brazil, accounting for 13.3% of the total exports, making Brazil the second largest export destination. From a data perspective, the order volume of India and Brazil has a significant impact on domestic phthalic anhydride exports.

Restricted export of phthalic anhydride in 2024

According to data from the General Administration of Customs, the total export volume of phthalic anhydride in the first half of 2024 was about 57300 tons, a year-on-year decrease of 25.68%. Among them, 5400 tons were exported to India, accounting for 9.46% of the total exports, and India became the second largest export destination. Exported 3000 tons to Brazil, accounting for 5.2% of the total exports, making Brazil the seventh largest export destination.

The implementation of BIS mandatory certification for phthalic anhydride produced in China by India in the second half of 2023 has hindered the export of domestic phthalic anhydride to the Indian market. Starting from the second half of 2023, the export volume to India has significantly decreased, and the market share in India has rapidly declined. Since the implementation of BIS mandatory certification for phthalic anhydride originating in China in the second half of 2023, exports to India have significantly declined. However, since the beginning of this year, the share of exports to India has increased compared to the same period last year.

On July 15th, the Management Executive Committee of the Brazilian Foreign Trade Commission issued Resolution No. 616 of 2024, deciding to impose temporary anti-dumping duties on phthalic anhydride originating in China for no more than 6 months. Affected by Brazil’s anti-dumping duties, the export volume of phthalic anhydride from China to Brazil has already decreased in the first half of this year, and the export volume to Brazil may decline again in the second half of the year.

Phthalic anhydride exports may rebound in the second half of 2024

According to data from the General Administration of Customs, although exports from India and Brazil have decreased, exports from other countries have increased. The United Arab Emirates became the top destination for phthalic anhydride exports in the first half of 2024, with an export volume of 6400 tons, accounting for 11.19% of the total export volume in the first half of the year; Türkiye’s export volume will increase from 2400 tons in 2023 to 3800 tons, and Türkiye is expected to become a new growth point of domestic phthalic anhydride export. Since June, multiple sets of phthalic anhydride plants in Asia have undergone maintenance in the second quarter, causing a rise in the price of phthalic anhydride in the Asian market and widening the price difference between domestic and foreign markets. The advantage of price difference in domestic phthalic anhydride exports has once again become prominent, and domestic phthalic anhydride exports are expected to increase.

Future forecast

According to the data analyst of Shengyi Society’s phthalic anhydride products, the domestic phthalic anhydride market has recently shown a trend of external heat and internal cooling. In the domestic market, the plasticizer market is traditionally in the off-season, and the demand for phthalic anhydride terminals is weak, resulting in significant market shipment resistance and facing inventory accumulation; The export market is stimulated by the maintenance of multiple sets of phthalic anhydride equipment in Asia, coupled with the expected rebound in exports in the second half of the year, resulting in a tight supply of export goods. In the future, the export of phthalic anhydride accounts for less than 10% of domestic phthalic anhydride production, which has limited impact on domestic phthalic anhydride prices. The terminal demand for phthalic anhydride continues to weaken, and the price increase of phthalic anhydride is weak. The expected rebound in the export of phthalic anhydride in the future provides some support for the price of phthalic anhydride, and with cost support, the downward pressure on phthalic anhydride is limited. Expected weak and volatile consolidation of phthalic anhydride prices in the future.

According to the Commodity Market Analysis System of Shengyi Society, the PP market in July saw a decline after consolidation, with the price drops of various brand products concentrated in the second half of the month. As of the afternoon of July 30th, the mainstream offer price for wire drawing by domestic producers and traders is around 7850 yuan/ton, a decrease of -1.70% compared to the price on July 1st.

Price trend

In terms of raw materials:

Due to the impact of various production cuts and the peak consumption season in the United States at the end of last month, international crude oil was at a high level. The price adjustment in mid to late July was weak, and market operators were bearish due to frequent price fluctuations. However, after the price loosened, there was trading volume and the overall decline was limited. The circulation speed of downstream propylene sources is average, and the overall price fluctuates and falls. In terms of propane, due to the rise in liquefied gas prices, propane has been pulled up and strengthened, while PDH production costs have improved. Overall, there has been a slight loosening of the support for PP from various raw materials recently.

Supply side:

In July, the load level of domestic PP enterprises reached an average of 70% of the previous operating level. There were some equipment short repairs during the month, but they were worn down by the resuming equipment, and the industry load was around 73% at the end of the month. The production level is generally stable, with a narrow increase in inventory and a narrow decrease in factory pricing for enterprises. At present, the on-site supply of goods remains abundant, and the supply pressure is stable with some increase.

In terms of demand:

The demand side of PP performed poorly throughout July, and the overall load of end enterprises remained stable. 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 relatively low at 40%, with weak enthusiasm for replenishing inventory. Due to the high raw material prices and slow cost transfer, the direction of membrane enterprises has resulted in low profit margins, leading to replenishment operations centered around essential needs. The comprehensive operating rate of injection molding enterprises is 50%, basically flat. The trading atmosphere in the downstream market of PP is generally average, with limited new orders and mostly pre delivery contracts. The demand side creates a certain drag on the PP market.

Future forecast

At the end of the month, the domestic PP market prices still showed a downward trend. The comprehensive support for upstream raw materials is loose, and PP demand is at a low season level. Short term gains are unlikely to materialize, and the supply and demand in the future will stabilize, making it difficult to change the consumption pattern in early August. Overall, it is expected that the PP market will continue to operate weakly in the short term.