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PP powder market under pressure

2020-12-16 08:03:03 CCFGroup

PP powder market moves lower last week, till last Friday (Dec 11), mainstream offers are at 8,520-8,550yuan/mt in Shandong province, and 8,650-8,700yuan/mt in East China.

First, profit has been narrowed by the high cost.

It can be seen that the propylene price moves higher, and its increase is obviously faster than that of PP powder. For powder enterprises who need merchant propylene, they are suffering around 200yuan/mt of deficit. From about 550yuan/mt in late November to about -200yuan/mt at present, the cash flow changes rapidly. As of last Thursday (Dec 10), only Dongming Dongfang Chemical, Shandong Luqing and Hengyuan lower their operating rate, and the operating rates of other plants maintains stable. Some enterprises said that they may shut their plants in the late market if the powder and propylene price spread has not narrowed, while enterprises in Jiangsu and Zhejiang are mostly equipped with upstream plants and the impact is limited.

Second, market transaction of PP powder has been suppressed by the low price spread between homo PP raffia and powder.

In addition to the pressure from the cost side, the powder is also under heavy pressure from PP granule market. Recently, homo PP raffia price is fluctuating around 8,500-8,600yuan/mt, and its price spread between homo PP raffia and powder is far less than the theoretical value of 300yuan/mt, and there is even a negative price spread in some periods. The low price spread directly pulls down the price advantage of PP powder. In addition, downstream demand is relatively weak, it is relatively hard to sell PP powder.

To sum up, currently, the supply and demand side of powder market is both weak, and powder plants may continue to be supported by the high cost in the short-term, traders are suggested to pay attention to the changes of price spread in the late market.