Propylene may have limited upside

- Jul 23, 2019-

Enter June, propylene market stabilizes rebound, price begins to rise.

As of July 2, the main transaction price of propylene in shandong was 7,700 ~ 7,800 yuan (ton price, the same below), up about 9.8% from the beginning of June.


"At present, the price of propylene has been relatively high. With the end of the maintenance of the propylene device in the early stage, the supply will increase, and the price may be limited in the later period."

Zhuo chuang propylene analyst ji hongwei said.


Good supply and demand


Prophase propylene market prices fell sharply, the main negative factor is the increase in supply.


In terms of supply, the total output of propylene reached 13.512,800 tons from January to may, up 10.22% year-on-year.

From January to April, the total imports of propylene reached 1.1382 million tons, up 21.27% year-on-year.

Supply of goods increased significantly, to the propylene market pressure, price decline.


In June, outside pan propylene supply less, with liaoyang petrochemical and other propylene plant maintenance and shandong part of the production enterprises load reduction, propylene market supply pressure relief, coupled with the early maintenance of some downstream factories have resumed production, driving propylene prices steadily rising.

On June 22, dongying hualian petrochemical co., LTD. 's propylene price was increased to 7,600 yuan.

On June 23, cnooc dongying petrochemical co., LTD. 's propylene quotation was increased to 7,600 yuan.

On June 24, shandong huifeng petrochemical co. LTD. Propylene price increased to 7,700 yuan.


Jinzhou petrochemical company marketing and transportation department of chemical section chief wang zhiqiang said, with the advent of summer, the new maintenance of propylene production enterprises significantly reduced.

In addition to the maintenance plan of a hybrid dehydrogenation plant in shandong province, early maintenance of daqing zhonglan, huaxing petrochemical, overseas energy technology, yongxin chemical and other propylene devices will resume restart, supply increase, difficult to bring strong support to the propylene market.


Downstream profit compression


With the increase of propylene market price, the profit margin of downstream products is narrowed obviously, especially the downstream polypropylene powder and butanol manufacturers are hovering near the cost line.


At present, some powder production enterprises with relatively high costs have seen negative decline, and the market price of butanol continues to fall, which aggravates the compression speed of product profit. In the later period, it is not excluded that butanol enterprises may reduce production.

Although the overall supply and demand performance of the propylene market is good at present, the market price is still expected to rise, but the narrow profit margin of downstream products has become the upward resistance of the propylene price.


"Recently, the profit margins of main downstream products of propylene have narrowed significantly.

PP powder quotation near the cost line, the powder production enterprises start to face greater pressure.

Since may, the market price of butanol has fallen rapidly, which shows a significant deviation from the trend of propylene market. Currently, n-butanol is hovering near the cost line, and octanol has lost money."

Zhao yan, director of the liaoning branch of chemical sales in northeast China, believes that if the price of propylene increases further, the construction of polypropylene powder and other manufacturers will face greater pressure.


Gains were limited


Business association propylene market monitoring, this year, propylene price center of gravity significantly downward.

In the first quarter, the price center of gravity fell back quickly, and the mainstream price of propylene in shandong fell from 8250 yuan to 6450 yuan, down 21.82%.

Second quarter propylene decline has slowed, but the price center of gravity continues to low shock, 7000 yuan has become a normal price.

However, in June, the focus of the price of propylene has risen month-on-month, the market sentiment slightly changed.


Industry experts believe that the average price of propylene from the center of gravity, this year significantly decreased.

So far, the average monthly price of propylene in shandong has dropped 853 yuan, or 10.45%, to 7,311 yuan.

From the perspective of monthly average price, the monthly average price from January to June has different ranges of decline, among which the decline in the first quarter is relatively small, with the year-on-year decline of 7.19%.

The decline in the second quarter widened significantly, with the monthly average price falling 13.66 percent year-on-year.

In June, the average price of propylene showed an upward trend for the first time month-on-month, and the average price reached a new high in nearly 4 months.


For the late trend of propylene market, business community chemical industry branch propylene analysts believe that the macro is still not optimistic, the negative impact on the market mentality will continue to exist.

In terms of supply and demand, propylene supply and downstream demand will increase simultaneously.

However, most of the additional production capacity of propylene and downstream is ancillary equipment, so the increase of propylene commodity volume is expected to be limited.

And the third quarter is the relative peak season of propylene demand, the later price center of gravity is expected to move up, but not much.

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