At the end of March, with the global spread of the epidemic, China increased the foreign aid of medical supplies, and the demand for melt-blown cloth, which has gradually cooled, once again exploded, driving the price of raw polypropylene to rise rapidly. However, with the continuous release of production capacity, the risk of polypropylene pullback is also intensifying.

Downstream demand surge

As the epidemic swept the world, the gap between supply and demand of masks continued to expand, as the core material of masks melt-blown cloth and its raw material prices rose again, the current price of some melt-blown cloth in China has reached 400,000 to 500,000 yuan (ton price, the same below), while the price before the epidemic was only 20,000 yuan.

"Driven by the demand for the downstream melt-blown cloth, the current price of high-melt polypropylene is about 80,000 yuan, and only 9000 yuan half a month ago. Now it is a few quotes a day, the price of the afternoon may vary by ten thousand yuan." A manager engaged in the sales of meltblow special materials said.

In fact, due to the rapid rise in the market price of melt-blown cloth, some enterprises that do not meet the production of medical grade melt-blown cloth have sprung up. Small workshop because the equipment process can not keep up, can only produce 300~400 low melt fingers of polypropylene, and the general melt-blown special materials are required to use 1500 high melt fingers of polypropylene.

"Some small and medium-sized enterprises are driven by profits, and the use of non-standard low melt finger polypropylene to produce meltblown cloth is also a reason to promote the price of raw materials polypropylene." Li Li, senior analyst at Jinlianchuang Chemical Co.

A number of analysis institutions believe that the high price of polypropylene in addition to the basic demand for masks, more is affected by market speculation arbitrage.

price rise or limited

"polypropylene prices are short-term, late or will return to the rational." Yang Lin, an analyst at Zhongyu Information, said.

From the perspective of raw materials, propylene production can adopt three routes, namely oil, liquefied gas and coal as raw materials, of which liquefied gas to propylene production is more, the cost is relatively low. At present, the supply of propylene is relatively sufficient, and the downstream market has begun to rectify, the demand or gradually reduce, and the propylene market has begun to correction.

From the downstream point of view, the Ministry of Commerce has issued the latest notice, from the early morning of April 10, KN95 masks are not allowed to laser coding with CE, FDA, FFP2, FFP3 and other words, only allowed to print the mask's own implementation standards and mask categories, and each batch of factory delivery masks to sample commercial testing and out of the test report. The violation of the operator and heavy punishment and revocation of certificates and certification. At the same time, local governments began to rectify the "three nots" home-style melt-blown cloth and mask manufacturers.

Under the rectification of the melt-blown cloth market, the demand for polypropylene fiber material will inevitably decrease. According to the current Chinese official data, mask production capacity of about 200 million/day estimates, polypropylene fiber material demand of about 200 tons/day, even counting the recent rapid expansion of local meltblown cloth small workshop demand, data doubled, the overall demand for polypropylene fiber material is only 400 tons/day. At this stage, China's polypropylene fiber material production ratio is close to 40%, polypropylene fiber material production has been about 20,000 tons/day, oversupply is self-evident, price correction is inevitable.

Benefit enterprises should still be vigilant

Affected by the rising price of masks, and the related industry chain also gets a share of the soup, melt-blown polypropylene special material production enterprises benefit.

meltblow material production enterprise Guoen stock disclosure of a quarterly report shows that the company attributable to shareholders of listed companies net profit of 69,398,900 yuan, an increase of 91.6%; The net cash flow generated by operating activities reached 75.8784 million yuan, an increase of 2.7 times. Preet's net profit in the first quarter reached 52 million yuan, up 112.01 percent year-on-year.

Driven by profits, some chemical enterprises are entering a period of expansion. Guoen shares said on the interactive platform that the company has 20 melt-blown polypropylene special material production lines in production. In view of the current market demand for melt-blown materials, five new production lines will be added on the basis of eight new production lines. It is expected that the installation and commissioning will be completed in mid-May, when the company has a total of 33 production lines to produce the material; The current output of melt-blown polypropylene special material of Preet US company can reach 20 tons/day; Satellite petrochemical melt-blown polypropylene special material unit is also in full capacity production.

Sinopec said that the company uses its own polypropylene raw materials to produce melt-blown cloth. At the end of May, after the 16 melt-blown cloth production lines are put into operation, together with the 5 tons/day capacity of the holding company, the annual production capacity of 10,000 tons of melt-blown cloth will be formed, which can be used to process more than 10 billion disposable medical masks every year.

Guotai Junan research report believes that in May, with the production line of melt-blown polypropylene special materials under construction being put into production one after another, and the batch listing of melt-blown cloth, the short-term supply and demand mismatch problem of polypropylene industry chain may be effectively alleviated, coupled with the impact of imported goods, the market will return to rationality, and the industry should be alert to investment risks.