Since the middle of September, the price of polypropylene has fluctuated downward. On the one hand, it is affected by the crude oil price, and on the other hand, it is due to the flat demand performance. Looking forward to the future, the cost support from the crude oil end will weaken, and the supply pressure will gradually release, but the inventory will move down, the demand is difficult to have a bright spot, and the PP price may continue to be weak.
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Increasing supply pressure
Recently, new polypropylene units have been put into production intensively, and the supply pressure is gradually emerging. Not only did Baofeng phase II start up smoothly, Dongguan juzhengyuan get through the whole process, but also Daqing Refining and chemical, Dushanzi petrochemical, Shenhua Xinjiang and other units that were overhauled in the early stage started up in succession. At present, the operating rate of polypropylene enterprises is about 97%, which is at a high level, and the supply materials will be abundant.
Spot price down
In terms of inventory, polypropylene inventory has declined since October 9, and as of October 18, it dropped to 403300 tons, reducing inventory pressure. On October 18, the factory price of petrochemical wire drawing grade was partially reduced, the price of petrochemical wire drawing in East China was reduced by 100 yuan / ton, and the price of PetroChina wire drawing in Northeast and Northwest China was reduced by 100 yuan / ton. With the spot price down, the basis is gradually repaired, and the period price is also under pressure.
Limited demand boost
As the domestic economy is under pressure, the overall consumption in the downstream is not performing well. Due to the limited orders and overstocked finished products, the enthusiasm for raw material procurement is insufficient, and the wait-and-see mood is relatively strong, mainly on-demand procurement. The overall demand of this year is worse than that of previous years, and the operating rates of plastic knitting and BOPP are lower than that of the same period in the past three years.
Weak cost support
For the week ended October 18, the number of active US oil wells increased by one to 713, the first two-week increase since June. Iran’s oil minister zangane said the U.S. sanctions failed to curb the development of Iran’s oil industry or reduce investors’ concerns about geopolitical risks, thus to some extent driving down crude oil prices.
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Technically speaking, the main contract pp2001 is lower than the 60 day average for three consecutive days, and it is under the pressure of the brin middle track. The opening of the brin channel has the potential to enlarge. MACD extends below the zero axis, which is slightly empty technically.
To sum up, with the introduction of new capacity and the resumption of production of early maintenance devices, the pressure on the supply side will gradually become prominent. However, the demand side is subject to the slowdown of economic growth, so it may not have bright spots as a whole. The support of cost side is weakening, and the price is under pressure. The risk factors lie in the continuous decline of inventory, and the aggravation of geopolitical risks driving up the overall price of chemicals.
Operation plan
1. Contract selection: select the main contract pp2001 with active transaction.
2. Build warehouse: build warehouse in batches. Pp2001 selects a machine to build 100 empty orders between 8050-8080 yuan / ton. The deposit occupied is about 800000 yuan and the capital occupied is about 8%.
3. Stop gain and stop loss: set the stop loss range as 8220-8270 yuan / ton with the middle track of brin as the reference; set the stop gain range as 7800-7830 yuan / ton with the low point in the early stage as the reference.
4. Risk control: in case of adverse market changes, strictly implement stop loss plan.
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