News summary
The PP market is affected by centralized maintenance and has low load, and new production capacity such as Anhui Tianda and Jinneng Technology put into operation will offset the losses. Downstream demand is weak, exports are affected, inventories are high, and petrochemical inventories are accumulated. PP made by PDH is suffering from cost pressure and its profits are narrowed. Short-term prices are driven by market sentiment. In the long run, the contradiction between supply and demand will intensify, and the risk of decline is high.
Newsletter text
[Investment in new production capacity affects market expectations, PP prices may face a fall]
As production equipment enters the maintenance stage, the PP (polypropylene) load rate decreases. However, after new production capacity of companies such as Anhui Tianda and Quanzhou Guoheng successively comes into operation, production capacity losses have been reduced.crouchingtigerdragonIn order to provide partial compensation, market investors are advised to pay close attention to the production progress of Jinneng Technology.
Currently, PP's downstream demand is weak and new orders growth is weak, resulting in meager production profits. In addition, PP's export situation has weakened due to the continued rise in sea freight costs and tight container supply on some routes.
Although PP's supply is at a low level in the short term, spot trading activity is inactive and inventory removal is slow. At the same time, petrochemical inventories were at a year-on-year high, and production companies gradually began to accumulate inventories.
Propane prices have risen due to high tolls in the Panama Canal and tight supplies in the Middle East, resulting in a shrinking profit margin for PP produced through PDH (propane dehydrogenation). Therefore, market participants need to pay close attention to the start-up of PDH PP equipment.
In the short term, PP prices are influenced by market sentiment and tend to be strong. However, as market sentiment cools, PP prices are expected to return to fundamentals. With the gradual resumption of production of maintenance equipment at the end of May and the continuous release of new production capacity, PP's supply is expected to increase, which may aggravate the contradiction between supply and demand, causing downward pressure on prices. In this regard, investors need to pay close attention to fluctuations in raw material prices and the progress of putting new production capacity into production.
