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PP to keep consolidation with little change in fundamentals

2022-12-02 08:30:47 CCFGroup

In Nov, PP market remains weak and is deadlocked as a whole. In the middle of the month, China has issued a new epidemic prevention and control policy, causing commodity market and stock market to rise, and PP is no exception. However, the growth is limited on the whole. At the beginning of the second half of the month, due to the impact of tighter prevention and control of the epidemic, strong expectations were outweighed by weak situation and market confidence was suppressed again. Commodity futures opens low and then moved down, and PP spot also falls downward under the drag of futures. On Nov 21, mainstream traders offer for homo PP raffia at 7,730-7,800yuan/mt, and some lower at 7,700yuan/mt.

Combined with the current available news, there is little change in fundamentals.

First, the operating rate is relatively stable

Plant operation(11.1-11.21)
Company	Location	Capacity(kta)	Shutdown	Restarted	Note
Sinopec Jingmeng PC	Jingmen	120	2022.11.1	/	shutdown
Hebei Haiwei	Hengshui	300	2022.11.6	/	shutdown
Zhejiang Petroleum & Chemical II #2	Zhoushan	450	2022.11.8	/	shutdown
Sinopec Zhenhai (ZRCC) #3	Ningbo	200	2022.11.12	2022.11.27	shutdown
FREP	Quanzhou	100	2022.11.13	/	shutdown
Sinopec Yangzi PC (YPC) #B	Nanjing	100	2022.11.14	/	shutdown
Sinopec Zhongyuan PC(old)	Puyang	60	2022.11.14	/	shutdown
Sinopec-SK (Wuhan) PC #JPP	Wuhan	200	2022.11.16	/	shutdown
Changzhou Fund	Zhangzhou	300	2017.7.1	2022.11.1	Restarted
Oriental Energy II #1	Ningbo	400	2022.10.17	2022.11.3	Restarted
Shenhua Xinjiang	Urumchi	450	2022.10.23	2022.11.10	Restarted
Sinopec Zhongyuan PC(new)	Puyang	100	2022.10.23	2022.11.16	Restarted
Qinghai Yanhu	Yanhu	160	2022.10.12	2022.11.17	Restarted
Sinopec Yanshan PC #2	Beijing	50	2022.9.21	2022.11.18	Restarted
Sinopec Maoming PC #3	Maoming	200	2022.10.28	2022.11.18	Restarted
Sinopec Guangzhou PC #3	Guangzhou	200	2022.11.1	2022.11.7	Restarted
PetroChina Daqing Refining & Chemical	Daqing	300	2022.11.1	2022.11.7	Restarted
PetroChina Liaoyang PC(new)	Liaoyang	300	2022.11.7	2022.11.15	Restarted
FREP #2	Quanzhou	220	2022.11.8	2022.11.10	Restarted
PetroChina Lanzhou PC	Lanzhou	300	2022.11.16	2022.11.19	Restarted

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Since November, the overall operating rate of PP is relatively stable, basically maintains 86-88%. The production proportion of homo PP raffia is still less than 30%, and the spot supply is relatively stable.

Second, the inventory level is below the medium level.

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At present, both inventory of PP and PE in China domestic coal chemical and private petrochemical plants and inventory of polyolefin (mainly PP and PE) in Sinopec and PetroChina are at a moderate lower level, which does not constitute substantial pressure on the market.

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Third, there is no significant changes in downstream demand.

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Taking downstream BOPP as an example, most plants maintain normal production, and the operating rate has not changed much. In terms of orders, since November, the orders of BOPP film plants have decreased to a certain extent, but the decline is relatively small. Currently, the orders of BOPP film plants are around 5-10days, some higher at around 15days, and they purchased the feedstock PP on need.

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To sum up, at present, the fundamental change of the PP market is limited, the supply and demand side continues to play the game, and the market may keep range bound in the short term. In addition, traders are suggested to pay attention to the macro policy changes in time. Under the current situation, the change of the macro environment may have become the most important factor in determining the market trend.

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