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The Oscillating Trend In The Later Stage Of Plastics
- Aug 04, 2018 -

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Driven by demand recovery, the plastics market has rebounded recently. Later, considering the increase of supply and the decline of cost, the price of plastic is oscillating.

Since July, demand for greenhouse films has been booming. Traders and downstream businesses are warming up with low replenishment. PE prices are rising. Technically, the price of plastic is still in the downstream channel, and whether the 1901 contract can stand on 9560 yuan / ton doubtful.

Demand is gradually warming

In June, demand was poor and plastic prices continued to go down. However, after hitting a new low for one year, the downstream enterprises'enthusiasm for replenishment on a low basis has rebounded, and the gradual improvement of greenhouse film demand further strengthens this replenishment behavior. At present, the operation rate of the downstream packaging film is stable, and the load of the plastic film starts is 23%, though low, showing a continuous upward trend. Therefore, with the arrival of the peak season of plastic film consumption, plastic demand is increasing.

Demand is getting warmer, PE supply is tight, inventory has declined. As of July 26th, the PE stock of East China Petrochemical Company was 50265 tons, down 9535 tons from the high point in early July, the decline was 15.94%; the stock of East China warehouse was 126 thousand tons, twenty thousand tons down from the high point in the early July, the decline of 13.70%; the social inventory was 217965 tons, and the decline was 35485 tons compared with the high point in the early July. The decline was 14%. Due to low inventories, the willingness to replenishment in the market is further enhanced, thereby stimulating methanol prices.

Repair equipment reopened in succession

In the early period, the price of plastics is low, the efficiency of the enterprise is not good, and the consumption is in the low season. Many PE production enterprises choose the equipment repair at the end of July June, and the production capacity is 6 million 260 thousand tons per year. However, after the consumer warms up and the price rises, the overhaul equipment will be restored on a large scale, and the rest of the equipment will be restored in early August. In August, only 760 thousand tons of Daqing petrochemical plant was planned to shut down.

Attention should be paid to the recent depreciation of the renminbi, the increase in the cost of imports of ethylene and plastic products, and the decline in import volume at the later stage. In addition, China's tax on the United States is countered, ethylene, plastic products are in it, and domestic imports of ethylene and plastics from the United States are not small, which may affect imports, and the latter market will increase the dependence on domestic output.

Oil and coal are easy to fall

In August, the consumption of refined oil was coming to an end, and the supporting role of demand for crude oil prices weakened. In addition, the number of active drilling in the United States has been increasing, and output has continued to rise. In the Middle East, although the sanctions against Iran affect the country's exports, other members of the OPEC are trying to increase production, and the gravity of the crude oil runs down.

In terms of coal, the peak of summer electricity consumption is coming to an end. The stock of coal and electricity enterprises has begun to accumulate, and the price of coal has fallen sharply.

Crude oil and coal are easy to fall, but PE costs are bound to fall.

Future market forecast

To sum up, the peak season of greenhouse film consumption is approaching, and the spirit of buying up or not buying will push the downstream to get goods, and the demand for plastic is picking up. However, the supply of pre maintenance units is resuming, and the supply will ease the tight supply. At the same time, upstream crude oil and coal prices have weakened trend, and cost support for the plastics market has weakened. Based on the above judgment, plastic prices do not have the basis for a substantial increase, and the recent market prices should be treated with a short-term rebound.