Where to go after propylene rises

Update:04 Aug 2016

Recently, the domestic propylene market has grown rapid […]

Recently, the domestic propylene market has grown rapidly, and market prices have repeatedly set new highs during the year. According to monitoring statistics, this round of rising prices started from the end of July. As of August 24, the Shandong propylene market price rose from 8450 yuan / ton to 9500 yuan / ton, an increase of 12.4%. The reason for this rise is mainly driven by polypropylene futures, tight market supply and overall downstream demand for recovery.

   First, polypropylene futures have skyrocketed. International crude oil prices are generally running at a high level. In the later period, under the influence of geopolitical factors such as the US-Iran conflict, there is still upward momentum, which has formed cost support for downstream products. Domestically, the continued depreciation of the renminbi stimulated the market to be more emotional, which led to an overall rise in the futures market. Since August, the price of polypropylene futures has ushered in a round. The cumulative increase of the main contract has exceeded 6%, breaking the high point in the past four years and easily standing at 10,000 yuan / ton. On the whole, the polypropylene futures market is like a shot of stimulant, effectively boosting market confidence, leading the spot prices of polypropylene and propylene to rise all the way, and the offers have been repeatedly refreshed.

   Secondly, the propylene market is in short supply and the supply side continues to be favorable. Starting from the end of June, some refineries in Shandong began to overhaul, and in late July, Jiangsu Silbang and Ningbo Fuki began to overhaul. The propylene market seems to have formed a good cycle, "device maintenance-better market conditions-good shipments-reduced inventory." On the whole, propylene installations in the early shutdown refinery have not yet been restored, and new shutdown installations have also increased. The supply of propylene market has become tighter, supporting the high offer of propylene.

   Regarding the source of imported goods, the ports arrived sporadically in July, mainly due to the relatively high maintenance of outer disk refineries, and the relatively higher price of outer disk propylene, resulting in a relatively small amount of propylene imports. In August, affected by the typhoon, a large number of ships in East China were blocked from arriving at the port, and the supply of propylene was not replenished in time.

   From the perspective of other downstream related products of propylene, the profitability of acrylonitrile, propylene oxide, butanol and epichlorohydrin are relatively considerable, and the acceptance of high-priced propylene is generally strong. Even if the price of propylene rises all the way, the downstream products are "favorable. Figure ". The production of acrylic acid, another downstream product, has been resumed in succession after a concentrated shutdown inspection in June and July, and the demand for propylene has increased. Although the price of acrylic acid has been hovering around the cost line for a long time, and downstream demand has not improved, but supported by the rising price of raw material propylene, market offers have continued to rise. In general, the downstream products generally give strong support to the propylene market.

   In summary, the current supply of propylene market is in short supply and the downstream demand is relatively stable. However, recent signs indicate that market pressure is gradually increasing. After the typhoon period, the increase in port supply has a negative impact on the propylene market. After propylene propelled up, the powder market was under pressure again. The price difference between polypropylene powder and propylene was too small, causing powder factories to fall into a comprehensive loss situation. Load reduction and even shutdown enterprises were everywhere. The demand side of propylene was greatly affected. Although the supply side is still supported, in the long run, the pressure is bound to continue to rise. Therefore, the price correction of the propylene market may be inevitable. However, crude oil will remain at a relatively high level due to the continued improvement in supply-side benefits and geopolitical factors such as the contradictions between the United States and Iran. It is expected that the price of propylene prices will be limited. The price of medium- and long-term propylene markets will continue to remain high.