The market rises, and the price of polypropylene may increase slightly
2023/8/14
In July, the gross profit space of oil-based PP production enterprises shrunk. The average gross profit of oil-based PP this month was -1248 yuan/ton, and the profit was reduced by 217 yuan/ton compared with the previous month, a drop of 21.05%. This month's oil price rose month-on-month. According to statistics, the monthly average price of crude oil was 79.62 US dollars per barrel, an increase of 5.99% from the previous month, which made the oil-based PP cost increase by 4.75% from the previous month. During the month, the price of PP spot market fluctuated and rose, and the ex-factory price rose by 2.36% from the previous month. The price range of oil-based PP is smaller than the increase in oil-based costs, so the gross profit margin of production companies is compressed; compared with the same period last year, oil-based profits increased by 463 yuan/ton, an increase of 27.06%.
Judging from the trends in the next three months, although there are differences in macro-level interest rate hikes, OPEC+ production cuts continue to support the market, coupled with the resilience of the U.S. economy, the overall market atmosphere is cautious and optimistic, oil prices are relatively volatile, and the average price is expected to move up slightly. From August to October, the fluctuation range of the two oils was between US$75-85/barrel, and the main monthly average prices of Brent were: US$81/barrel, US$83/barrel, and US$84/barrel. In August, the high cost of crude oil continued, and cost changes were limited; however, the price of oil-based polypropylene has a probability of rising, so it is expected that the profitability of oil-based PP may increase, and the profit loss level of oil-based PP is expected to be (-1300)-(- 1000) yuan/ton.
In July, the average profit price of coal-based PP was -364 yuan/ton, a decrease of 288 yuan/ton compared with the previous month, a drop of 378.95%. The price of thermal coal fluctuated and rose in July, and the cost of coal-based PP rose by 470 yuan/ton, or 6.89%, from the previous month; the price of coal-based PP rose moderately, with an average price increase of 2.71% from the previous month, and the price increase of coal-based PP was smaller than that of coal-based PP. The increase in cost, so the gross profit space is compressed; compared with the same period last year, the coal-based profit increased by 399 yuan/ton, an increase of 52.29%.
From the perspective of August, some coal mines in production areas that suspended production and sales in the early stage will gradually return to normal, and domestic coal supply will increase compared with the current one. In terms of imports, imported coal has an obvious price advantage over domestic coal, and the quantity of imported coal in the later period is still relatively guaranteed. On the demand side, as the high temperature weather passes, residents’ demand for electricity will decrease, and the daily consumption of power plants will decrease, while the non-electricity industry will continue to maintain on-demand purchases. Overall, the coal demand’s support for the market in August will decline. Strong supply and weak demand, thermal coal prices are expected to have a certain room for decline, but coal-based PP prices may rise to a certain extent, because coal-based PP profits are expected to increase slightly, and the profit margin is expected to be (-300)-(-200) yuan/ton .
In July, the gross profit of methanol-to-polypropylene was reduced. The average price of methanol in July was 1987 yuan/ton, and the average price rose by 242 yuan/ton, or 13.87%, from the previous month, making the cost of methanol rise by 11.14%. 2.96%, the increase in the cost of methanol PP from external mining is less than the increase in the price of methanol to polypropylene, so the profit margin is compressed. According to the data, the average profit of methanol-to-polypropylene produced outside this month was -314 yuan/ton, a decrease of 528 yuan/ton from last month, a drop of 246.73%. Looking at the next month, the supply of methanol in the mainland is still expected to rebound in August, which is expected to bring some pressure on the price of methanol. However, considering that the overall inventory of enterprises is not high, downstream demand is still expected to rebound in August, so overall, In August, the market price of methanol in the mainland was still fluctuating in a range. In August, the price of methanol fluctuated within a narrow range, and the price of PP produced from externally mined methanol is expected to rise. It is estimated that the profit of externally mined methanol may increase, and the profit range may be (-260)-50 yuan/ton.
In July, the profitability of PDH-made polypropylene increased. This month, the average profit level of PDH-made polypropylene is -196 yuan/ton, a decrease of 210 yuan/ton compared with last month, a drop of 1500.00%. The average price of imported propane this month is US$542/ton, an increase of US$50/ton, or 10.16%, from the average price of last month, which makes the cost of PDH-made polypropylene rise by 5.30% month-on-month. This month, the price of PDH-made polypropylene products fluctuated and rose, and the price rose by 2.32% from the previous month. The increase in cost was greater than the increase in the price of PDH-made PP, so the profit margin was compressed. In August, domestic propane prices may gradually weaken after a short-term strength. From the current point of view, the CP rise is expected to be strong in August, and driven by industrial demand, the market has no pressure for the time being, and there is still room for growth in the short term. However, with the rise in prices, the benefits of rising CP in August are gradually being consumed, and the downstream replenishment is concentrated in the near future, while the burning demand has not substantially increased. After the short-term price rise, the market may weaken due to shocks. Of course, considering the expectation of rising demand brought about by the change of seasons, the propane market may be in a trend of easy ups but hard downs. The price of propane is expected to be lowered, but considering that the price of PDH-made polypropylene may increase slightly, it is expected that the profit of PDH-made polypropylene may increase, and the profit space is (-100)-50 yuan/ton.
In July, the profit of polypropylene produced from outside mining was reduced, and the average profit level in the month was -159 yuan/ton, which was 84 yuan/ton lower than that of the previous month, a drop of 112.00%. The average price of propylene this month was 6,464 yuan/ton, an increase of 244 yuan/ton, or 3.92%, from the previous month. The rise in propylene has led to a simultaneous increase in the cost of PP produced from outside mining propylene, an increase of 3.47%. This month, the price of polypropylene products made from propylene produced from abroad fluctuated and rose, with an average price increase of 2.32% from the previous month. The increase in the cost of polypropylene produced from externally mined propylene is greater than the increase in the price of polypropylene, so profit margins are compressed. Looking at the next month, the supply pressure in the propylene market will increase in August, but the cost and demand will be relatively strong. It is expected that the propylene market will compete with supply and demand, and the price center of gravity will fluctuate strongly. The propylene market will continue to rise next month, and the price of polypropylene may increase slightly. It is expected that the profit of polypropylene produced from externally mined propylene may continue to narrow, with a profit margin of (-300)-(-150) yuan/ton.
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