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Polyolefin prices continue to decline from high levels and will still actively explore the bottom

Word：[Big][Middle][Small] 2023/10/12 Viewed：

From the growth rate of primary form plastic raw materials and plastic product production in the first eight months of 2023, it can be seen that the production of primary form plastic raw materials has maintained a steady growth, while the growth rate of plastic product production in the first five months was inferior to that of primary form plastic raw materials. After improving in June and switching to a positive growth rate, the acceleration of plastic product production in July was obvious. The growth rate of plastic product production in July was faster than that of primary form plastic raw materials, and in August, the two went their separate ways, The growth rate of the production of 8 plastic products is much slower than that of primary plastic raw materials. In addition, from the perspective of external demand, the export of plastic products remains weak, with negative growth rates appearing for the first time in May and continuing thereafter. In the short term, the price of polyolefin raw materials will follow the international crude oil price correction, and there is still an opportunity to continue to rise after the correction is in place.

Primary form plastic production continues to accelerate growth

In August 2023, the production of primary plastic raw materials in China reached 10.0815 million tons, a year-on-year increase of 13.5% and an increase of 3.8 percentage points compared to the previous month; The cumulative production from January to August was 76.839 million tons, a year-on-year increase of 4.7%, an increase of 0.5 percentage points compared to January to July. Overall, the cumulative growth rate of plastic raw material production is still lower than the average of the previous five years, and domestic demand is weak. However, the acceleration was significant in June, July, and August.

The acceleration of plastic product production growth is one of the important factors supporting the rise in raw material prices

In August 2023, the domestic production of plastic products reached 6.355 million tons, a year-on-year increase of 6%, a decrease of 2.8 percentage points compared to the previous month. The cumulative production from January to August was 47.818 million tons, a year-on-year increase of 1%, and an increase of 0.5 percentage points compared to January to July. The growth rate of plastic product production in August decreased month on month; The growth rate of plastic raw materials is lower than that of primary forms, which is equivalent to sufficient supply of raw materials and weak downstream demand.

From the difference between the growth rate of plastic product production and the growth rate of primary form plastic raw materials, it can be seen that the negative year-on-year growth rate of the two increased to -8.7% in May, and decreased to -2.8% in June. Obviously, May was the largest negative growth rate of value in the year, while July directly turned positive. In August, due to the expansion of plastic raw material production growth rate, plastic products shrank and once again turned negative. Because the raw material supply was sufficient in August, while the demand for downstream products was weak. The combination of external demand and weak export of plastic products has overall suppressed the price of plastic raw materials.

Where is the polyolefin market heading?

From a macro perspective, the PMI index in September was 50.2%, an increase of 0.5 percentage points compared to the previous month. In the past two years, it decreased by 0.5 percentage points compared to the same period last month and increased by 0.7 percentage points compared to the same period last year. After a 5-month hiatus, it returned to the expansion range, and the manufacturing industry continued to recover, further confirming the stability and recovery of the economy. However, currently, the overall performance of the demand side is still weaker than that of the supply side, and the foundation for economic recovery needs to be further consolidated. Overall, domestic demand is gradually improving, but plastic product exports remain weak and have been experiencing negative growth rates for several consecutive months. Since the continuous decline of polyolefin futures prices at the beginning of the year, they have formed a bottom of the year at the end of May, with consecutive increases in June, July, and August. They began to decline in mid to late September, and continued their downward trend after the October holiday. In the short term, polyolefin futures prices continue to decline from high levels and will still actively explore the bottom. The subsequent trend will depend on the recovery of effective demand, as well as the trend of coal and crude oil prices.

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