[ Introduction] December is destined to be an extraordinary month. We have experienced unprecedented long-term price stabilization, and we have also experienced a sudden and sharp drop. Traders spent cautiously in disappointment and hope. We follow the market closely, but There has never been the slightest slack, and I believe that only everyone who is closely involved in the market can truly empathize.
In December, the propylene market embodies the game of supply and demand to the fullest. Whether it is an upstream production company, a downstream procurement company, or a middleman, every trader has worked hard, as if fighting a silent battle. The game of supply and demand wins. Let us review what happened to the propylene market in December.
(1) At the beginning of the month, Luxi Chemical's 300,000-ton / year MTO unit was put into operation, the contradiction between supply and demand in the propylene market intensified, downstream procurement companies ignited hope, and market prices fell as scheduled. The period is 6 days.
(2) In the middle of the year, Luxi Chemical's MTO unit stopped and failed to restart, and Tianjin Bohua's PDH unit overhauled the market at the end of the month. Upstream manufacturers ignited hope. The price of the propylene market was stable and stable. Disk status. This wave of the Shandong market has fallen by 20 yuan / ton, a decline of 0.30%, with a continuous period of 13 days.
Although prices have been sideways for a long time, the game of supply and demand is not limited. At this time, downstream factories and traders have been fully prepared for Bohua parking in advance. Considering that Bohua parking will lead to a decrease in some long-term supply of propylene in Shandong, by then, propylene prices may rise, and some downstream factories and traders began to place large orders for external disk orders to avoid risks. At this time, due to the severely polluted weather, the load of the downstream factories was reduced, and the shipments of production enterprises did not significantly improve. The expected benefits of Bohua ’s maintenance have been digested in advance.
(3) In the second half of the year, Shandong propane prices are skyrocketing. Long-term profitable PDH units and mixed alkane dehydrogenation units have suffered substantial losses, while crude oil prices have also shown a volatile upward trend. Except for coal-based propylene, the remaining process propylene has entered a full-line loss. The production enterprises are struggling. And at this time, the source of the outer disk ordered in the early stage began to be concentrated in Hong Kong, which is even worse for the production enterprises that have been waiting for Bohua's maintenance. Due to the diversion of imported sources of downstream users, the inventory of production enterprises continued to rise, but it was disappointed without hope. Shandong propylene ushered in a sharp decline before the overhaul of Bohua. As of December 27, the Shandong propylene market had fallen by 215 yuan / ton. The decline was 3.23%, and the duration was 3 days.
Although the inventory pressure of manufacturing companies has still been relatively large after undergoing a substantial dip, the willingness to continue to decline is already weak, and it has been heard that some manufacturing companies have experienced volume control phenomena, and the propylene market has begun to stabilize and stabilize. This is because the propylene market has reached a "point" at present, and there are many factors that shape this "point". Let us analyze it below:
(1) On December 28, the overhaul of the Bohua Plan is about to be embarked on. Regardless of the actual impact or mentality impact, the production enterprises still have hope.
(2) The prices of crude oil and propane are increasing, the prices of raw materials continue to be high, the operation of alkane dehydrogenation units is difficult, and some dehydrogenation units have started to self-rescue through shutdown.
(3) The lowest price of Shandong propylene in 2019 is 6,400 yuan / ton, which appeared in April. At this time, the price of 6,450 yuan / ton in Shandong, if it has not stopped falling, will hit a new low for the year.
(4) As the polypropylene market, which continues to be weak like propylene, likes to rise, the polypropylene futures market has risen strongly in recent days, boosting the market mentality. On December 27, the mainstream PP powder sales in Shandong were 7250-7330 yuan / ton Ushered in a narrow range.
Although the current stabilization of the market is a bit stiff, it has to be said that it is not easy for production companies. Below we will focus on the stockpile situation of downstream factories after the market is forcibly stabilized and the inventory of production enterprises. Of course, the most noteworthy issue is whether the Bohua PDH plant can be shut down as scheduled. However, due to the expected improvement in the overhaul of Bohua has been digested in advance, and the negative impact of import sources on the market next week is expected to continue, it is still difficult for Shandong propylene market prices to rise. We must not be too optimistic but be too pessimistic about the current market conditions. No matter what, hope is still there!
Full year analysis in the annual report of propylene, click to view sample