The fluctuation of RMB exchange rate has limited impact on domestic polypropylene market

- Aug 07, 2019-

Recently, influenced by international factors and many other factors, the depreciation of the RMB against the us dollar is obvious, the onshore and offshore RMB exchange rates below the "7" level, the domestic panic is rising, A shares consecutive falling.This round of RMB exchange rate fluctuation makes the market panic. This round of exchange rate fluctuation has a limited impact on the domestic polypropylene market price. The following is a simple analysis for you.

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1, supply and demand determine the price of low import dependence of polypropylene

The basic supply and demand of polypropylene is the decisive factor to determine the price of polypropylene in China.Macro disadvantages will affect the mentality and mood of market buyers, and then the purchase quantity in the market, which will have an impact on the price to some extent.China's polypropylene is a low-import dependent variety, and the main changes of supply and demand in the market are still determined by the domestic market. Under the background of greatly weakened demand for verification and cancellation, the price of imported sources of goods is mostly adjusted in line with the domestic market, and the settlement scale of usd is gradually reduced, and its influence is gradually weakened.

2. The central bank is cautious in predicting the RMB exchange rate

The first interest rate cut by the federal reserve in a decade has finally been implemented, and most of the world's major central Banks have followed suit. However, the central bank has not taken any substantive measures to deal with the exchange rate fluctuations this time, and the overall monetary policy is still mainly targeted easing.Some speculators may once again be targeting profit opportunities to short the renminbi, hoping to profit from the middle ground of Hong Kong by buying large amounts of dollars in part through low-cost financing.

Although some foreign trade enterprises still need to purchase foreign exchange to avoid the risk of exchange rate fluctuations, but the feasibility of RMB exchange rate speculation is low, the central bank has a mature response to this, and the RMB exchange rate is hard to rise or fall sharply fluctuations, market players do not need to be overly alarmed.

3, import price pressure domestic capacity corresponding to make up

A strong dollar is causes the domestic import enterprise procurement costs rise obviously, while the Middle East and southeast Asia mainstream already cut prices in China by foreign investors, but the current foreign trade companies operating cautious, purchasing volume is extremely limited, the future of polypropylene import quantity affected or appear a certain degree of decline, but marginal increased supply of domestic enterprises 3 quarter, Qingdao big oil refinery, qinghai salt lake, jiujiang petrochemical, shenhua yulin, jingmen petrochemical, Shanghai secco project back to drive, when combined, is the source and the new device will be formally put into production in August and stable operation.The increase in domestic production will effectively make up for the possible decrease in import sources, and the decrease in import volume will hardly lead to a sharp rise in prices.

To sum up, the recent fluctuations in the RMB exchange rate will exert some pressure on the price of import in the future, but this pressure is difficult to transmit to the domestic market price. It is suggested that the industry should pay attention to the domestic production planning and supply and demand situation, face the exchange rate fluctuations with a calm mind and be cautious about speculation