test

Member ID:
Password:
Stay logged in for 30 days
close

login CCFGroup App

Insight | Time: Mar 4 2022 10:28AM  Editor:Amber
Impact of surging international crude oil on PP market
 
Text size

Returning from the Spring Festival holiday in 2022, PP futures and spot market shows a "V" trend, and the inflection point occurs at the time of the conflict between Russia and Ukraine.


07(Q3UZRYPI[NA[QRAWI31N.png


Since late February, the conflict between Russia and Ukraine has escalated to military action, international crude oil has continued to soar. On Mar 3, WTI futures rises to $114/barrel, a new high since October 2018, and Brent crude oil rises to $117/barrel, the highest level since June 2012.

 

Driven by the surge in crude oil, China domestic commodities generally soar. Currently, the PP May futures contract breaks a new high for the year, and spot price also rises. On Mar 3, mainstream traders offer for homo PP raffia at 8,850-8,950yuan/mt in East China.

 

Although PP spot price rises, from the perspective of market transactions, there is obvious resistance to the increase in spot price, downstream is reluctant to purchase high-price materials and hedgers procures for arbitrage.


%GYE}(I6~M9VLF@M9LW]M]Y.png

However, from the perspective of cost, PP spot price is obviously underestimated. At present, the theoretical benefits of each production process are not very good, with a general loss of 1000-1500yuan/mt (without considering the reserve of raw materials and other factors). Although it is acceptable for the profit to be compressed as the production capacity of new China domestic plants continues to be released and the market competition intensifies, the current situation is somewhat beyond expectations. In the long run, if the price of raw materials continues to remain high, the cost pressure of production enterprises will gradually be emerged.

 

News on raw materials:

1) Saudi Aramco has announced CP in March: propane at $895/mt, up $120/mt from the previous month; butane $920/mt, up $145/mt from the previous month.

2) On Mar 3, mainstream price of propylene in Shandong have risen to 9000yuan/mt.

3) On March 2, the daily price naphtha-CFR closed at $1055.6/mt; at noon on March 3rd, the April MOPJ of naphtha is estimated at around $1045mt CFR.


Plant operation
company location Capacity 锛圞TA锛 Shutdown Restarted Note
Changzhou Fund Changzhou 300 2017.7.1 / shutdown
Shandong Yuhuang Shandong 100 2017.7.18 / shutdown
Sinopec Wuhan PC Wuhan 105 2021.11.12 / shutdown
Haiguolongyou #1 Daqing 200 2022.2.1 / shutdown
Zhongjing PC Fuzhou 350 2022.2.13 / shutdown
Zhongan Lianhe Anhui 350 2022.2.14 / shutdown
Zhongjiang PC Fuzhou 350 2022.2.27 / shutdown
Zhejiang Petroleum & Chemical  II #1 Zhoushan 450 2022.3.1 2022.3.5 shutdown
Shandong Shenda #1 Tengzhou 200 2022.3.1 2022.3.15 shutdown
Shandong Shenda #2 Tengzhou 80 2022.3.1 2022.3.15 shutdown
Hebei Haiwei Hengshui 300 2022.3.1 2022.3.21 shutdown
Sinopec Qilu Petrochemical Zibo 70 2022.3.2 2022.3.30 shutdown
Xuzhou Haitian Xuzhou 200 2022.3.3 2022.3.14 shutdown
Qinghai Yanhu Yanhu 160 2022.2.19 2022.3.3 Restarted
Sinopec Yangzi PC (YPC) #2 Nanjing 200 2022.3.15 2022.5.9 Scheduled Maintenance
Sinopec Hainan Refinery Danzhou 200 2022.3.15 2022.5.11 Scheduled Maintenance
PetroChina Dalian PC Dalian 200 2022.3.18 2022.3.29 Scheduled Maintenance
Sinopec Sabic Tianjin (SSTPC) Tianjin 450 2022.3.20 2022.3.31 Scheduled Maintenance
Sinopec Yangzi PC (YPC) #A Nanjing 100 2022.3.21 2022.4.30 Scheduled Maintenance
Sinopec Yangzi PC (YPC) #B Nanjing 100 2022.3.21 2022.5.28 Scheduled Maintenance


Under the pressure of high cost, some enterprises have reduced their operating rate and shut their plants. For example, Dongming Hengchang Chemical is now operated at 50% due to cost problems, and Xuzhou Haitian shut its PP plant on account of cost problems. In addition to planned maintenance and temporary failures, the reduction on operating rate or shutdowns due to cost factors are expected to increase. In addition, the startup of new plants may also be delayed.

 

At present, the increase of domestic chemical products is far less than that of international crude oil. If the conflict between Russia and Ukraine cannot be properly resolved, crude oil prices are expected to remain high, and PP futures and spot price may continue to rise. As for the growth rate, downstream demand and actual procurement needs to be considered. .


[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
Related Articles
Polypropylene market daily (Mar 18, 2024)
Polypropylene market daily (Mar 14, 2024)
Polypropylene market daily (Mar 13, 2024)
China PP plant maintenance schedule from Mar-Jun
Polypropylene market daily (Mar 12, 2024)
Polypropylene market daily (Mar 11, 2024)
Polypropylene market daily (Mar 7, 2024)
Polypropylene market daily (Mar 6, 2024)
Polypropylene market daily (Mar 5, 2024)
Polypropylene market daily (Mar 4, 2024)
 
Research
Polyester industry chain operation during the Spring ...
2023 recycled market review and market outlook for 2024
PFY market pattern in 2024 and forecast before and after ...
Regional distribution and development characteristics of ...
Why PET flakes supply so tight?
 
 

娴欏叕缃戝畨澶33010902000742鍙