In August, the general plastics market rose, especially ABS resin, but also out of the bright performance of nearly 1,000 yuan a week, the price center of gravity continues to break through. Polypropylene (PP) naturally unwilling to lag behind, but the upcoming production capacity (expected to be 2.3 million tons) has exerted good pressure on supply, resulting in a long-term ups and downs in the market. Golden September, the traditional peak season, is to continue to hibernate, or strong upstream, PP seems to have used these two days of action to tell us the answer.

table 1: 2020 September to December expected new production capacity table

As usual, we are still from the upstream to find the source of the market upside, but found that international crude oil and propylene monomer did not play a major role in this wave of the market. As of August 31, the closing price of propylene monomer CFR China 853-859 yuan/ton; FOB South Korea closing price of 813-819 yuan/ton, up 35 yuan/ton from the beginning of the month. International crude oil Nymex WTI closing price of $42.61 / barrel, up $1.60 / barrel from the beginning of the month; IPE Brent closed at $45.28 / barrel, up $1.13 / barrel from the beginning of the month. From the data point of view, the upstream in August showed a roundabout improvement trend, but for the PP industry, this only a few points of increase only support, not promote the ability. So, PP price recovery from where to explore the reason? Everything also starts with inventory.

After experiencing inventory accumulation during the epidemic in February and March, Sinopec and petrochina have been in the process of destocking, and the results are good. As of August 31, the inventory of the two oil companies had dropped to about 585,000 tons, down 90,000 tons from the previous week; 170,000 tons less than the same period last year. Due to the favorable low inventory of petrochemical enterprises, and the cooperation of the month-end period, the major regions have a strong willingness to raise prices, hold high the banner of the traditional peak season, and strive to create a speculation atmosphere, and the market price has been pushed to a high point in a short time.

table 2: two oil from certain brands price move table

summary: Under the blessing of ""gold nine silver ten"", the shortage of overall social circulation resources will continue to exist, the inventory pressure of the production end and the intermediate trade link will not be too large, and the future market will be sufficient. In addition, the plastic knitting, injection molding and other industries gradually bid farewell to the off-season, downstream factory procurement efforts began to follow up, superposition the high expectations of the industry. The author expects that the recent PP market will still run on the side.