In the first quarter of this year, global energy markets were volatile, accompanied by geopolitical jockeying, Brent rose from a high of $77.78 a barrel in late 2021 to $127.98 in early March, its highest level in nearly a decade. At present, under the influence of multiple factors, international crude oil prices still remain high and volatile.

From the point of view of China's plastic market, the price center of gravity continues to rise in the first quarter driven by costs. Before the Spring Festival, the downstream stock, the price is strong shock. After the Spring Festival, with the rise of crude oil, the price has been adjusted up, and then due to the limited resumption of terminal work, the price has turned downward. As the downstream terminals resumed work one after another and crude oil rose all the way, the price reached a short-term peak in mid-early March, and then was affected by the easing of the international geopolitical situation and the Opec + increase in crude oil production news, the price fell sharply. In mid-March, with the Fed's interest rate hike boots landing and other factors, China's plastic prices again rose slightly with crude oil prices.

From the perspective of various plastic products, compared with the first quarter of 2021, the prices of polyethylene (PE) and polystyrene (PS) rose slightly, and the prices of polypropylene (PP), polyvinyl chloride (PVC) and ABS fell slightly. Compared with the fourth quarter of 2021, the price of polyethylene and polystyrene declined slightly, the price of polypropylene and polyvinyl chloride was basically flat, and the price of ABS rose slightly. In the first quarter, under the trend of the overall price rising, each product showed a different trend.

Strong cost support in the first quarter, March prices briefly high

In the first quarter of this year polyethylene (PE) showed "M" trend. Before the Spring Festival, some market participants were bullish on the post-holiday market, the market hoarded goods increased, and the market was strong. After the Spring Festival holiday, polyethylene futures rose strongly, driving the market products to rise strongly, as the price continues to rise, the transaction shrank, some profit-making actively set out, the market fell slightly. At the end of February, affected by geopolitics, international crude oil prices soared, under the strong support of the cost side, polyethylene prices rose again, but downstream profits shrank, high trading pressure, petrochemical inventories continued to be high, at the end of the first quarter, the market was weak. In addition, the supply of polyethylene in China increased in the first quarter, Zhejiang Petrochemical phase II 350,000 tons/year low pressure polyethylene, 400,000 tons/year high pressure polyethylene device and Zhenhai refining and chemical phase II two sets of 300,000 tons/year low pressure polyethylene devices have been put into operation, China's supply has shown a growth trend.

In the first quarter of this year, the polypropylene (PP) market has also experienced ups and downs. In January, polypropylene futures trend in most days, the market speculation sentiment is strong, the overall market price rose; February across the Spring Festival holiday, the international crude oil prices rose to drive up the polypropylene market after the holiday, spot prices rose rapidly, but the downstream has not yet fully resumed production, middleman inventory consumption is slow, the rally briefly ended, the market entered the decline mode. In March, international and regional conflicts led to the rapid rise of international crude oil prices, polypropylene by the strong support of the cost of the rapid rise; As the situation eased, crude oil prices fell sharply, and the polypropylene market followed suit. At the same time, the epidemic has occurred in many places in China, and the market transportation of goods has been affected to some extent, resulting in the slow consumption of raw material stocks. Near the end of March, polypropylene futures once again made strength, but the rally remained short, and the market trend returned to rational development. In terms of price, the highest offer of wire drawing in the first quarter is 9700 yuan/ton, the minimum offer is maintained at 8100 yuan/ton, and the mainstream offer of wire drawing at the end of the first quarter is 8700-8900 yuan/ton. Copolymer polypropylene maximum offer 9650 yuan/ton, the minimum offer to maintain 8300 yuan/ton, the end of the first quarter copolymer polypropylene mainstream offer in 8750 yuan -8900 yuan/ton.

The first quarter of China's polyvinyl chloride (PVC) market ups and downs, the shock range basically remained at 8400-9400 yuan/ton or so. In January, China's PVC market volatility is not large, the eve of the Spring Festival holiday PVC market trading atmosphere flat, downstream enterprises have holidays, PVC market prices strong operation. In February, China's polyvinyl chloride market experienced ups and downs. After the end of the Spring Festival holiday, PVC futures continued to rise under the drive of crude oil, and the spot market rose significantly. In mid-late February, with the weakening of market sentiment, due to market fundamentals less than expected and the delay in the start of downstream products enterprises in the north, futures fell quickly, and the spot market price fell again, falling to the level before the Spring Festival holiday. Into March, the PVC market price is strong adjustment, but the shock range is reduced, basically adjusted up and down at 9000 yuan/ton, the spot market price is more chaotic, merchants according to their own conditions, downstream to maintain just need to take goods, the overall transaction situation is general. As of the end of March, China's polyvinyl chloride market prices remain high, calcium carbide method 5 material mainstream reference in 9180 yuan -9430 yuan/ton, ethylene method mainstream in 9420 yuan -10040 yuan/ton.

From January to early March this year, polystyrene (PS) fluctuated in a narrow range, and a wide range fluctuated in mid-late March. In early January, driven by strong commodities and chemical products, the price of raw material styrene increased, and the cost support was enhanced. Later, due to the impact of the epidemic, the demand for nucleic acid test rods in the field of medical devices increased, and some petrochemical manufacturers producing polystyrene increased their prices. But at the same time due to the impact of the epidemic, delivery is difficult, some materials are in short supply, and business offers are rising positively. In mid-late March, with the tense geopolitical situation, international crude oil skyrocketed, styrene surged, merchants significantly increased the price of goods, and the trading atmosphere improved. However, as crude oil fell sharply, styrene continued to fall, petrochemical manufacturers increased shipping pressure, superimposed supply circulation restrictions, businesses have cut prices and sales, the market upside down into the normal. At the end of March, some polystyrene devices were affected by production reduction and parking, and some materials were supported by tight supply, merchants' offers were raised, but the shipping pressure was still large. As of the end of the first quarter, the mainstream price of domestic general grade polystyrene (GPPS) market in East China is 10200 yuan -12000 yuan/ton, and the mainstream price of high impact polystyrene (HIPS) market is 11850 yuan -13300 yuan/ton.

ABS market, January this year affected by the epidemic situation in Ningbo, the market supply shortage, some of the center of gravity slightly increased. As the tension of supply eased, the price fell. Later, with the continuous surge of crude oil, the circulation of goods in the field is tightening, driving merchants to raise the price of goods one after another. Before and after the Spring Festival in February, international crude oil rose strongly, and the market center of gravity rose accordingly. As crude oil and styrene prices fell, and downstream demand was slow to return to normal, ABS petrochemical manufacturers began to lower prices. In March, international crude oil skyrocketed, driving styrene higher, and merchants have adjusted higher prices. However, after the price rose sharply, the market turnover was weak. With the sharp decline of crude oil and styrene, and the restrictions on transportation in some areas affected by the epidemic, the price focus of commercial negotiations continued to decline.

The internal and external environment of the second quarter is complex, and the market trend of plastic products is unclear

The external environment of China in the second quarter is still complex. In the short term, local geopolitical conflicts are leading to a gloomy outlook for the world economy. From China's perspective, the Chinese economy is still under pressure in the second quarter. The multi-point spread of the epidemic in China will affect consumption and the overall economic recovery. The development trend of the plastic products market is still unclear.

In the case of high and volatile crude oil prices and shrinking profits of petrochemical enterprises, the insured policy of polyethylene production reduction continues to be implemented. China's supply and imported resources are expected to decrease, the Chinese market downturn coupled with the epidemic factors, the second quarter supply is expected to be reduced. According to the seasonal rule, China's demand is good in April, and the overall demand is weak in May and June, when we need to pay attention to the situation of the epidemic and geopolitical evolution. The price of high-pressure products has continued to strengthen since last year, and the price gap with other products has been increasing. In the first quarter of this year, the price of high pressure polyethylene slowed down, at the end of March, Zhejiang Petrochemical high pressure polyethylene new production capacity was released, the supply is expected to increase in the second quarter, and the price gap between linear and low pressure products is expected to continue to narrow. In the second quarter, the supply and demand of linear and low-pressure varieties are weak, and under the operation of high oil prices, the cost support is still there, and the price is mainly fluctuated in the range.

Polypropylene under the effect of high cost and supply reduction, there is still a high expectation after the price decline in April. With May and June Huating Coal Industry, Luqing Petrochemical, Jinggang Petrochemical, Tianjin Bohua, Jingbo Petrochemical and other annual production of 3.1 million tons of new plants, competition intensified, the formation of a pressure on petrochemical prices. But at the same time, the maintenance in April and May is relatively concentrated, which can hedge the pressure brought by some new devices. On the demand side, in addition to the plastic knitting industry, automobiles and household appliances in the film and injection molding industry still maintain relatively light consumption expectations. In addition, logistics transportation and downstream construction in April have been affected to varying degrees, with the control of the epidemic in May and June, the demand side is expected to improve. Polypropylene prices are expected to rebound in the second quarter or show a trend of decline after shock.

For polyvinyl chloride, positive factors slightly dominate. The second quarter is the PVC enterprise maintenance season, the market has a certain resistance; On the demand side, although the epidemic situation in China is repeated, the overall environment is stable and good, and the operating rate of downstream products factory enterprises is still expected to increase, so the downstream PVC market offer is more likely to maintain a high operation, and the price center of gravity is higher.

In the second quarter, polystyrene or maintain a range of shocks, and there is a certain possibility of good in the later period, but the upward space is limited, and it is still necessary to be vigilant about the risks caused by crude oil pullback. Some polystyrene equipment to reduce production, the overall level of start down, some material supply is tight; Terminal demand is expected to recover, but the contradiction between supply and demand still exists. In addition, it is necessary to pay attention to the production of new equipment, supply is expected to increase, and China's polystyrene market or weak operation after price shock.

In the ABS market, the second quarter is the peak season for the purchase of traditional home appliances, and some ABS devices are stopped and repaired, and the spot supply is reduced, or the price forms a certain support. However, at present, ABS social inventory is high, downstream demand is slow to recover, public health events continue to develop, terminal export orders may be reduced, local logistics and transportation are limited, and business shipments are under pressure. Therefore, it is expected that in the second quarter, China's ABS market or show a downward trend of shock.

In view of the above, before the international situation is completely eased in the second quarter, the cost will continue to remain high, or form a certain support for the plastic market. However, under the influence of the new coronavirus epidemic, the actual demand of the downstream has not fully recovered, and it is still necessary to pay attention to the recovery of the demand side and the supply side in the later stage. On the whole, facing maintenance in the second quarter, the recovery degree of the downstream market of plastics is different, and the trend is different for each product. It is expected that polyethylene (PE), polystyrene (PS) and ABS show a shock trend, but polystyrene may improve in the later period, while ABS may fall; Polypropylene (PP) may rebound after the decline, polyvinyl chloride (PVC) may be the overall trend of higher.