where will the PP market go in 2020PP pellets: where will the PP market go in 2020
The downward trend of the global economy in 2019 is already an indisputable fact. With the uncertainty of the Sino-US trade war, China's economic downward pressure is also greater. In addition to being affected by macro and fundamental aspects, the impact of related products on PP price trends should not be underestimated.
1. PP/PE spread trend comparison
The core of the PP market in the first half of the year is how to remove inventory. In the second half of the year, the equipment was overhauled in June-August. The supply was in short supply, and the market showed a slight rebound trend. In September, the newly-launched devices were honored one by one, and the bearish atmosphere reappeared. In the fourth quarter, due to the impact of capacity expansion, prices fell rapidly. Compared with PE, the price fluctuation in the second half of the year is smaller than that in the first half of the year, so the PP/PE price gap in the second half of the year shows a trend of narrowing. Near the end of the year, PP market holiday demand slowly recovered, prices gradually gained support, and the decline slowed down.
Second, PP/PP powder price difference trend comparison
In 2019, the market was affected by the low price of propylene monomer. In the first half of the year, the price of PP powder operated at a low level, and the price difference of PP/PP powder fluctuated between 400-800 yuan/ton. In the second half of the year, the price of propylene monomer was high, the market price of PP powder was firm, and the price of PP pellets continued to decline, and the price gap gradually shrank. Near the end of the year, the price difference narrowed to 100-200 yuan/ton, and the price reduction of PP pellets was compressed.
III. Comparison of PP/recycling spreads
In 2019, there is a price difference between recycled PP and new material PP, and its supply volume is large, so it can form a certain substitution for new material. However, in recent years, the policies of the recycled plastics industry have been tightened step by step, resulting in the price gap between recycled plastics and new materials gradually narrowing. In terms of recycled PP, the ideal price difference between new and old materials is 1,500 yuan/ton, but after 2017, recycled PP is supported by shrinking supply and high wool costs, and the price is somewhat resistant. The new material is affected by many factors such as rigid demand, inventory, futures, etc., and the price difference between PP new and old materials is about 600-1000 yuan/ton for most of this year. As of the current price, the price difference between new and old materials has fallen to 500 yuan/ton. The price advantage is weakened, and the demand for new PP materials increases.
In the first quarter of 2020, the overall polypropylene market price was weak and volatile. The operation of the capital will bring about short-term fluctuations in polypropylene prices, but the long-term perspective is still on the supply and demand side. On the supply side, Zhejiang Petrochemical, Dalian Hengli Phase II and other devices are planned to be put into production before and after, and the production will be gradually released in the later period, combined with the impact of the Spring Festival small holiday, the supply side inventory is accumulating and the pressure is increasing, but the demand side has no major positive stimulus, although the trade is preliminary The agreement was reached, but the stimulus to plastic products is limited in the short term. It is expected that PP prices will still have room to fall in the first quarter of 2020. The low drawing level is expected to break the 2019 level at around 7,000 yuan/ton.