I. price trend

According to the data of business associations’list, the domestic adipic acid market last week (10.8-13) was slightly lower than before the festival. Dealers’ quotations declined mainly. Market prices fell by 100 yuan/ton, the percentage of decline was 0.71%. By the end of the weekend, the quotation is generally between 8300 and 8500 yuan/ton.

II. Analytical Review

Last week, adipic acid market slightly declined. After the festival, the market did not usher in the “silver ten” peak season. On the contrary, it slightly declined than before the festival. Most distributors reduced their quotations by about 100 yuan/ton. The market in East and South China declined. The market atmosphere was slightly cool and the distributors were mainly active in delivering goods. The market maintained a weak and volatile pattern. At present, the downstream market has a more wait-and-see mentality. Deals are slightly deadlocked, and there is room for retailers to concede profits.

On the supply side, the market supply is still in a relatively loose range, and many distributors said that the inventory pressure is high, the start-up rate of plant is high, the market inventory and manufacturer inventory have risen, the pre-holiday market has staged reserve behavior, affected by this, after-holiday goods slowed down slightly. Last week, dealers successively took delivery of goods, so there were relatively low price sources flooding the market. There was a certain bargaining space for products, and the price difference between market price offer and firm offer was still kept. Dealers in North China, East China and South China adjusted their quotations to varying degrees, and most regions maintained stable market.

In terms of demand, downstream demand is relatively flat. The traditional “Silver Ten” market has not arrived as scheduled this year. The downstream start-up rate is still slightly insufficient. The start-up rate is about 50%. There is no strong boost to the upstream adipic acid. From the cost point of view, the upstream pure benzene market has turned downward since the end of September. At present, it is mainly weak, and the cost level lacks favorable support. The market has gradually returned to flat, and the market has entered the de-inventory cycle. According to the monitoring of business associations, the reference price of East China market is about 8300-8450 yuan/ton, while the price of South China is generally between 8400-8500 yuan/ton.

3. Future Market Forecast

Analysts of adipic acid in the chemical branch of the business association believe that the current market is weak, the market shows a certain contradiction between supply and demand. At present, adipic acid is in excess supply and weak demand. Therefore, the Business Association believes that adipic acid market may continue to maintain a narrow adjustment pattern in the short term.

Recently, the price of alumina has risen more and less, and the volume of spot transactions has been very low. The price seems to have stagnated and the trend is weaker and weaker. Recently, Beijing, Tianjin, Hebei and the surrounding areas are facing heavy pollution weather, and the alumina industry is restricted, which also fails to cause big fluctuations in the market. At the other end of alumina, electrolytic aluminium, we can see that aluminium prices not only hit a new high in the year, but also the profits are high in recent two years. Alumina factories are generally in a low profit or even loss situation, and the current alumina market makes the industry somewhat difficult to understand.

Judging from the start of alumina production, the overall operating capacity of domestic alumina has not changed much before June. Except for a few roaster overhauls, the actual output has little impact. According to the statistics of Luzheng futures, the operating capacity of domestic alumina in January-July of this year was basically about 73 million tons (the delivery of a letter in early May stopped, but other capacity was offset later), until mid-July. Later in the decade, we saw the reduction and compression of alumina production in Xingan Chemical Industry, China Aluminum Mining Industry and Shuijiang Chongqing, and the overall operating capacity dropped to around 71 million tons. Therefore, considering the demand of non-metallurgical grade, the supply of alumina in the first half of the year is excessive, at least quite abundant. Moreover, in May-June, when the price of alumina soared to more than 3100, the profit excess compensation stage, the output release is not small. Taking the output of the National Bureau of Statistics as an example, the output of Henan Province in Shanxi Province remained basically stable before June, and the output of Shanxi Province declined sharply only in July, mainly due to the shutdown of the delivery of communications, while the output of Henan Province remained basically stable. We have counted that the construction of Henan Province has been started at about 11 million tons, with little change in scope. This shows that although alumina prices have changed a lot in the first half of the year, the actual production is relatively stable, and a lot of stock must be produced. However, the actual inventory of alumina plant is not high at present, the last round of price collapse basically transferred to the middleman, and the middleman dumped goods to accelerate the price decline inventory transferred to the alumina plant, so the current pressure on alumina sales is not large, is to support the capital of alumina plant.

Looking at electrolytic aluminium, in the first half of the year, the recovery of electrolytic aluminium has been relatively slow. In the first quarter, the overall starting capacity maintained at 36 million tons, or even less than 36 million tons. In the second quarter, the starting capacity rose slightly, to 36.46 million tons, and in the third quarter, to 36 million tons. In August-September, due to the reduction of Weiqiao and Xinfa, the starting capacity dropped to 35.5-36 million tons. Meanwhile, the current supply of alumina is in excess, so the demand of alumina for electrolytic aluminium in the first three quarters is significantly lower than that for alumina production. This is also the reason why this year’s domestic alumina market has a long surplus, a short supply shortage and a weak rebound foundation. Therefore, judging from the effect of this round of price rebound, alumina price is dead set near the cost line, not only the price rebound is small, but also the volume is very low. When alumina overshoot happened in the early stage, large-scale electrolytic alumina manufacturers had a large amount of stock. According to the evidence, many large-scale demand factories in Northwest and Northeast China have basically purchased spot products in the year. The demand for spot purchases in the fourth quarter is not large, and the demand for transactable products is not large.

Table: Aluminum Production Capacity Change and Prospect
Slowing Up Trend: Prospect of Alumina Market in the Fourth Quarter

In addition, the trend of Chinalco is also the key force influencing the market trend. In 2019, Chinalco trusted the Western hydropower and Qiaotou aluminium power plants and purchased Yunnan Aluminum shares. Its capacity of operation and management electrolytic aluminium jumped to more than 7 million tons, while its capacity of alumina only increased by 1.6 million tons. Although the capacity of alumina under Chinalco has reached 20 million tons, the overall trend is that Chinalco has oxygen in the past two years. Aluminum carbide and electrolytic aluminium production capacity increment completely do not match, and this year because of losses in Shanxi and Henan, a large number of production capacity is not full, which means that this year China Aluminum International Trade in the alumina market sales pressure dropped significantly.

According to the annual report of Chinalco, in 2018, Chinalco will produce 13.51 million tons of alumina (part of the joint venture has strong operational independence, not to be sold by Chinalco International Trade), 4.17 million tons of electrolytic alumina and 5.46 million tons of alumina surplus. If Wenshan aluminium industry is included and the scale of electrolytic aluminium under its management, it is estimated that Chinalco will produce 15.2 million tons of alumina and 6.8 million tons of electrolytic aluminium on the basis of 2018. The alumina surplus will drop to 2.07 million tons, reflecting the sharp decline of alumina surplus in China this year, which has resulted in a sharp drop in the pressure on Sino-Aluminum to sell and the demand for market entry operations. Sino-Aluminum has shifted from the role of seller to that of buyer in the alumina market. We have not seen a Price-Limiting letter issued by Sino-Aluminum International Trade after the sharp fall in alumina prices.

Looking at the trend of alumina in the fourth quarter, we do not expect that there will be a big contradiction between supply and demand in the alumina market. The price trend is expected to remain stable, but the situation will continue to improve. The contradiction between supply and demand will gradually accumulate in the first half of 2020, and there may be a trend opportunity.

From the perspective of alumina start-up, due to the impact of environmental protection in autumn and winter, the production of alumina in the northern region may be depressed, but recently Jinzhong hopes to resume production. We estimate that the probability of alumina start-up in the fourth quarter will remain around 72 million tons, but considering the average monthly demand for imported alumina, it can basically meet the domestic demand for nearly 37 million tons of electrolytic aluminium.

From the perspective of the start-up of electrolytic aluminium, the recent reduction of production caused by the start-up accident of electrolytic aluminium is very slow. It is expected that the delay will lead to an increase in the buyer’s wait-and-see sentiment. Fortunately, in the fourth quarter, Xinfa, Xinhengfeng, Guangyuan Linfeng, Baitianlin, Weiqiao and other aluminium factories will resume production and increase. The start-up in the fourth quarter will rise significantly, and the start-up is expected to return to more than 37 million tons in November (in fact, it is still possible to resume). Production progress is relatively slow, we are relatively optimistic.

Therefore, the domestic demand for alumina will not be significantly improved until the middle and late November. If we strengthen environmental protection, the start-up and output of alumina will be restrained, and the price may also be able to rush upward. According to the current cost situation, it is estimated that the high point will be between 2650 and 2700, and then the upward price will stimulate the increase of supply. The capacity of alumina production will resume to more than 73 million tons, and the supply pressure will be increased. It’s not that powerful. It should be noted that the restrictions of environmental protection on the supply of domestic mines in autumn and winter, as well as the rise in the price of liquid alkali, have led Shanxi and Henan to fall into deep losses again, thus starting production capacity and output decline, which may accelerate the accumulation of contradictions in alumina supply, price or usher in a rebound supported by cost.

On October 11, the hydrogen peroxide commodity index was 137.32, up 8.7 points from yesterday, down 36.71% from the cyclical peak of 216.98 points (2017-12-24), and up 91.41% from the lowest point of 71.74 on August 03, 2016. (Note: Period refers to 2011-09-01 to date)

According to the monitoring of business associations: in October, hydrogen peroxide ended its fall in September and ushered in a sharp rise. As of October 11, the domestic average price was 1263 yuan/ton, with a daily increase of 6.76%. Since October 8, the price of hydrogen peroxide has been rising, up 7.98% from the beginning of the month to the 11th.

quotations analysis

Since September, hydrogen peroxide has entered the traditional consumption season. In September this year, hydrogen peroxide did not rise as expected. After the Eleventh holiday, hydrogen peroxide manufacturers began to open parking maintenance plans, supply became tight, manufacturers have increased their ex-factory prices one after another, and the market continued to boost. The daily increase ranged from 20 yuan/ton to 50 yuan/ton, up to 100 yuan/ton.

The price of hydrogen peroxide rose sharply on November 11, with Hebei and Anhui showing the biggest increases, while Shandong was relatively small. The ex-factory price of 27.5% hydrogen peroxide in Zhengyuan Fertilizer Industry of Hebei Province rose to 1350 yuan/ton and 200 yuan/ton. Anhui Jinhe 27.5% hydrogen peroxide price 1650 yuan/ton, the price rose 150 yuan/ton; Anhui Quansheng 27.5% hydrogen peroxide price 1450 yuan/ton, the price rose 100 yuan/ton. In Shandong province, the price of 27.5% hydrogen peroxide is 1180 yuan/ton, 40 yuan/ton higher; Haineng 27.5% hydrogen peroxide is 1260 yuan/ton, 40 yuan/ton higher.

Industry chain: The rise of hydrogen peroxide in October is closely related to downstream rigid demand support besides its own shutdown and maintenance. As one of the downstream of hydrogen peroxide, the market of caprolactam has gradually improved. Through the comparison of hydrogen peroxide and caprolactam, we can see that hydrogen peroxide has risen by nearly 50% in three months, and the downstream caprolactam market has risen by 6.09%. The cost of raw materials promotes the domestic caprolactam market to rise. Supported by favorable conditions, the price of liquids began to rise, while the price of solids kept rising. PA6 followed closely with the price rise. Terminal caprolactam market warmed up, supporting the continued rise of hydrogen peroxide market.

Outlook for the future

Business society hydrogen peroxide analysts believe that September failed to show a sharp rise in the market as scheduled, hydrogen peroxide manufacturers are ready to start, hydrogen peroxide manufacturers shut down in October, after the market price is easy to rise, difficult to fall, silver can be expected.

Price Trend

According to the data from the business associations’list, this week is the first week after the National Day holiday, the pure benzene market continues to be weak before the festival. At present, the price of pure benzene is 5300-5750 yuan/ton, down from 5500-5900 yuan/ton before the festival, with a decline of 3.16%.

II. Analytical Review

1. Products: The listing price of Sinopec was firm at the beginning of this week, and it was lowered to 5750 yuan/ton on Thursday. Prices of pure benzene and hydrobenzene in Shandong local refineries have been lowered before the National Day due to environmental inspection, production restriction and poor transportation, in order to promote shipment. After this festival, the start-up load of the reworked hydrobenzene plant has been continuously increasing, and the supply has increased, which once again has a certain impact on the pure benzene market. And the downstream demand is weak, market wait-and-see is dominant, which increases the bad news for the weak market.

2. Crude oil: The impact of Saudi Arabia events dissipated during the National Day, and the international crude oil futures market was empty, crude oil prices fell significantly. After the festival, due to the impact of Sino-US trade risks and the increase of U.S. crude oil inventories, international oil prices have continued to downward momentum. But news of an attack on an Iranian tanker increased the risk of supply disruption in key oil producing areas, and oil prices rose rapidly. Compared with last Friday (October 4), WTI increased by 3.87% and Brent by 3.46%.

3. Relevant industries: Aniline prices remained stable downstream this week, although the cost side was loose, but the stock was not high to support the price; Styrene downstream this week maintained low demand, and imports of Styrene before the festival arrived in Hong Kong in large quantities, prices fell sharply, support for pure benzene weakened.

4. External market: China’s external market closed during the National Day, the U.S. and South Korea arbitrage window closed, the overall external market showed a downward trend, short of the domestic pure benzene market.

3. Future Market Forecast

1. Crude oil: The overall oil market is still not optimistic, there are still downside risks.

2. Domestic market: Restoration after the festival, domestic hydrobenzene enterprises start-up load has increased, and next week Shandong downstream equipment maintenance, downstream just need to reduce, pure benzene market is difficult to rebound.

3. Outside: The price gap between inside and outside has narrowed, CFR China negotiations have increased, and subsequent supply pressures have increased.

Considering comprehensively, pure benzene is expected to continue its weak operation next week, and there is still a downward possibility.

According to Paris on October 11, 2019, the International Energy Agency (IEA) recently lowered its daily global oil demand growth forecast for 2019 and 2020 by 100,000 to 1.2 million barrels and 1.2 million barrels respectively in its latest monthly oil market report.

The fall in 2019 mainly reflects a technological adjustment, as new data show that increased demand in the United States in 2018 has curbed this year’s growth figures. For 2020, this decline reflects a decline in global gross domestic product (GDP) prospects.

The IEA says there will be two distinct situations in global oil demand this year. Demand grew by 425,000 barrels a day in the first half of this year, the weakest growth since the last recession. However, in the second half of this year, the IEA expects demand to grow by 1.57 million barrels per day. Recent data support this forecast: demand growth in non-OECD countries was 1 million barrels per day in July and 1.5 million barrels per day in August, respectively. China’s demand growth was steady, with an increase of more than 500,000 barrels per day over the same period of last year. Demand in OECD member countries remains relatively weak, with year-on-year growth recovering in the second half of this year, thanks to a low base in the second half of 2018. Demand is also supported by Brent crude oil prices, which have fallen by more than 30% from the same period last year.

The IEA lowered its forecast for global oil demand growth to 1.2 million barrels a day next year as global GDP growth is expected to decline.

I. Trend analysis

Nickel prices fluctuated narrowly this week, according to business association data. At the beginning of the week, the nickel price was 137166.67 yuan/ton. At the end of the week, the nickel price fell to 136583.33 yuan/ton, a slight drop of 0.43%, a 52.29% increase over the beginning of the year and a 34.03% increase over the previous year.

II. Market Trend Analysis

Recently, nickel prices have been in a narrow fluctuation trend. In early July, the news of Indonesia’s Mine Ban fluctuated, and eventually the dust fell to the ground. Nickel prices soared by nearly 40%. After the nickel price reached a high level, the high and narrow range shocks were dominant, and there was no big fluctuation.

At the beginning of this week, the Shanghai nickel index was 138830 points. Since then, prices have shocked narrowly, closing at 136710 points on Friday, with a weekly decline of 0.44%. The LME3 was $17,770 at the beginning of the week and closed at $17,645 at the end of Friday, a 0.40% weekly decline.

Downstream, stainless steel production profit slightly lost, inventory at a high level. The premium of nickel sulfate is higher than that of electrolytic nickel, and the consumption performance is weaker. Market: This week, nickel turnover is normal, business delivery is flat, downstream purchasing willingness is general.

3. Prospects for the Future Market

Nickel analysts from the Nonferrous Metal Branch of Business Association believe that Indonesia’s mining ban policy has a significant impact on nickel enterprises. The Philippines can hardly afford the import demand of nickel mines in China, and nickel mines will face shortage. However, previous gains were mainly due to the full realization of positive factors, coupled with weak consumption and insufficient momentum to continue to rise in the short term. Nickel prices are expected to remain volatile.

Price Trend

According to the data of business associations, the domestic market price of monoammonium phosphate dropped in the third quarter of 2019. The average ex-factory price of powdered monoammonium was 2183 yuan/ton on July 1, and 2066 yuan/ton on September 30, falling by 6.06%.

According to the data of business associations, the domestic market price of diammonium phosphate dropped in the third quarter of 2019. On July 1st, the average price of 64% diammonium was 2616 yuan/ton, and on September 30th, the average price of 64% diammonium was 2416 yuan/ton, down 7.64%.

II. Market Analysis

Monoammonium: In the third quarter, the domestic market of powdery monoammonium declined. In Anhui, 55% ammonium powder is quoted from 1950 yuan to 2100 yuan/ton, and the start of construction is stable. In Hubei, 55% of ammonium powder is quoted at about 2050 yuan/ton, while 60% of ammonium powder is quoted at 2050-2200 yuan/ton. Henan market maintained stable operation, 55% of ammonium powder factory quoted 2100 yuan / ton, and started smoothly. The price of 55% ammonium powder in Shandong province is 2000-2100 yuan/ton, which is stable. Sichuan province 55% ammonium powder factory quoted about 2050 yuan/ton.

Diammonium: the domestic diammonium market fell in the third quarter. At present, 64% of diammonium in East China mainstream factory quotation 2100-2300 yuan/ton. At present, 64% of diammonium in Hubei province is offered 2300-2400 yuan per ton, 64% of diammonium in Shandong is offered 2200-2400 yuan per ton, and 64% of diammonium in Yunnan and Guizhou is offered 2400 yuan per ton.

Industry chain: In the third quarter, the domestic sulphur market continued to be weak, the price trend was down, the downstream demand performance was weak, there was no news support on the site, refineries in various regions fell appropriately according to their own conditions within the week. At present, the contradiction between supply and demand in the market is still the same. There is no news guide for the internal and external market. The atmosphere of stalemate and wait-and-see is strong, and the enthusiasm of terminal purchasing is weak. Domestic phosphorus ore slightly decreased. The overall market maintains stable operation, with small fluctuations in some areas. The price of liquid ammonia is relatively weak due to supply pressure. On the other hand, demand is not substantially good. The demand of compound fertilizer enterprises is insufficient and the whole is weak.

Industry: According to the price monitoring of business associations, there are 2 kinds of commodities rising and falling in the price list of phosphorus chemical industry in September 2019, 2 kinds of commodities falling, and 1 kind of commodity rising or falling to 0. The main commodities rising were yellow phosphorus (20.29%) and phosphoric acid (8.55%). The main commodities falling were monoammonium phosphate (-3.88%) and diammonium phosphate (-2.42%). This month’s average rise and fall was 4.51%. According to the price monitoring of business associations, there are three commodities rising and falling in the list of chemical fertilizer prices in September 2019, six commodities falling and ten commodities rising or falling to zero. The main commodities rising were ammonium nitrate (6.72%), liquid ammonia (2.39%) and ammonium sulfate (1.06%). The main commodities falling were ammonium chloride (-6.31%), monoammonium phosphate (-3.88%) and diammonium phosphate (-2.42%). This month’s average rise and fall was – 0.57%.

3. Future Market Forecast

Ammonium phosphate analysts at business associations said the ammonium phosphate market was weak in the third quarter and prices continued to fall. Due to insufficient follow-up downstream, the market price of raw material sulfur has fallen sharply, and the market of ammonium phosphate is difficult to improve. The downstream compound fertilizer market is light and enterprises have a strong wait-and-see attitude. It is anticipated that the ammonium phosphate market will continue to decline in the later period. It is suggested to pay attention to the situation of winter reserve fertilizer and raw material market.

Price Trend

According to the data of business associations, caprolactam prices rose in September. The average market price of caprolactam was 1 2033.33/ton at the beginning of the month and 12 600.00/ton at the end of the month, which was 4.71% higher than that at the beginning of the month. On October 9, the caprolactam commodity index was 64.38, up 1.01 points from yesterday, down 35.62% from 100.00 points in the cycle (2017-03-02), and up 10.69% from 58.16 points on May 16, 2017. (Note: Period refers to 2017-03-01 to date)

II. Market Analysis

Products: Up to October 10, Shandong Luxi Chemical Caprolactam liquid price 11900 yuan/ton, cash out of the factory, the first and second phase of the plant normal start-up operation, the actual transaction can be negotiated; Baling Hengyi Caprolactam liquid quoted 13,000 yuan/ton, accepted delivery, 450,000 tons of caprolactam plant normal operation. Hubei Sanning caprolactam liquid offer 12700 yuan/ton, accepted delivery, 140,000 tons of caprolactam plant normal operation. Fujian Tianchen caprolactam liquid price is 13700 yuan/ton, the plant is in normal operation, acceptance delivery.

Industry chain: In September, the pure benzene market was adjusted as a whole. The attack on Saudi Arabia led to a surge in the crude oil and benzene markets. The reference price of pure benzene on September 30 was 5752.00, which was 9.14% higher than that on September 1 (5270.20). Cyclohexanone market followed. The reference price of cyclohexanone on September 30 was 9050.00, which was 11.27% higher than that on September 1 (8133.33). Downstream PA6 is driven by cost. The reference price of PA6 on September 30 was 14566.67, up 6.72% compared with September 1 (13650.00).

Industry: According to the price monitoring of business associations, there are 46 kinds of commodities rising annually in the chemical sector in the list of commodity prices rising and falling in September 2019. Among them, 30 kinds of commodities increased by more than 5%, accounting for 35.7% of the monitored commodities in the sector. The first three commodities increased were nitric acid (54.17%), butanone (37.13%) and hydrochloric acid (35.14%). Thirty-two kinds of commodities declined annually, 13 of which declined by more than 5%, accounting for 15.5% of the monitored commodities in this sector. The products of the first three declines were trichloromethane (-20.83%), sulfur (-16.35%) and R22 (-14.00%). This month’s average rise and fall was 4.09%.

3. Future Market Forecast

Analysts of business association caprolactam believe that the domestic caprolactam market rose in September because of the cost of raw materials. Supported by favorable conditions, the price of liquids began to rise, while the price of solids kept rising. PA6 followed closely with the price rise. In October, the crude oil and pure benzene markets gradually declined and the atmosphere was flat. It is expected that the market of caprolactam will be consolidated in the later period.

In the fourth quarter, the pressure of domestic polyolefin new production capacity release, supply side is facing a larger increase expectation, while the peripheral market also ushered in the peak of capacity expansion, olefin prices continue to bear pressure, import pressure has increased, especially PE market is more significant. On the demand side, downstream construction of plastics is at a low level, the overall demand is weaker than last year, downstream construction of PP is still acceptable, but due to the negative growth of automobile production and the decline of household appliances production, terminal demand in the fourth quarter is hard to say optimistic. From the valuation point of view, in the first half of the year, the production cost of Shenhua Baotou and China Coal Energy and other coal chemical giants ranged from 5100 to 5700, and the gross profit of sales was still more than 1500 yuan/ton. Horizontal comparison of polyolefins in chemical products was overestimated.

Therefore, under the background of loose supply and weak macro-level in the fourth quarter, there is still room for downward market price focus.

Domestic supply increased in the fourth quarter

In 2019, domestic PE plans to put into operation six sets of devices, involving capacity of 2.38 million tons per year. Among them, Jiutai energy products have been put on the market in June, and Sino-Angolan Union has also achieved mass production and sales in September. Baofeng Phase II is expected to be commissioned in October. Qinghai Damei, Zhejiang Petrochemical and Hengli plan to put into production in the fourth quarter. Although some devices may be delayed, the centralized release of new capacity in the previous period in the fourth quarter will still bring a lot of incremental supply.

In 2019, China’s PP plans to put into operation eight sets of devices with a capacity of 3.47 million tons per year. Among them, Satellite Petrochemical, Jiutai Energy and Hengli have been put into operation smoothly. Zhongan started commercial operation in September. Juzhengyuan is expected to produce in October. Baofeng plans to start production in October, and Damei and Zhejiang Petrochemical Plans in Qinghai put into production in the fourth quarter. At present, Juzhengyuan, Zhongan and Baofeng products are expected to concentrate on the market in the fourth quarter.

This year is a small year of petrochemical overhaul, especially PE varieties, and the low overhaul rate also led to a substantial increase in production, of which the cumulative output of PE increased by 12.9% (2.2% last year) in January-August and 13.1% (9.7% last year) in linear cumulative growth. At present, the planned maintenance in the fourth quarter is not strong, and the pre-parking devices will be restarted at the end of September. Under the background of new capacity release and maintenance return, the market supply pressure may be further highlighted.

With the help of overhaul window and increased sales, Petrochemical olefin inventory has dropped to a low level in the year, and low inventory supports short-term market prices. However, with the device restart at the end of the month, the market supply gradually returns, and downstream has some inventory, Petrochemical is expected to reopen the accumulation, especially after the National Day holiday will appear obvious accumulation.

The import window opens again

In 2019, foreign countries are also the year of polyolefin production. PE and PP plans to increase production capacity by 5.29 million tons per year and 3.05 million tons per year. From a time point of view, peripheral production is concentrated in the second half of the year, and some new devices will be exported mainly to China, which will undoubtedly increase the supply pressure in the domestic market.

Customs data show that PE imports totaled 9.523 million tons from January to July, up 18.2% year-on-year, LLDPE imports 3.031 million tons, up 24.9% year-on-year. Loose supply in overseas markets has led to pressure on US dollar quotations, and the current import window has reopened. With the release of overseas capacity in the fourth quarter, PE import pressure has increased, especially in the competitive low-end material market.

Customs data show that PP imports from January to July totaled 2.844 million tons, an increase of 6.4% (up – 3.3% last year). Since late August, due to the rebound in domestic prices, the price gap between domestic and foreign prices has shifted to a positive link, and the import window has reopened. Combined with the transport time accounting, it is expected that October arrival volume will increase annually.

Weakening downstream demand expectations

The data show that the cumulative output of plastic products from January to August was 60.669 million tons, an increase of 8.1% over the same period last year, and the cumulative export volume was 9.258 million tons, an increase of 11.0% over the same period last year. According to the third-party survey, the high output growth in July and August may be related to export rush. The United States plans to impose tariffs on the remaining commodities in October. Exports in the fourth quarter are expected to fall.

As far as PE is concerned, the downstream agricultural film has entered the peak production season, and the start-up rate has steadily increased. After the end of October, the production of packaging film has basically stabilized. Relatively speaking, the downstream load is at a low level this year, and the overall demand is weaker than last year.

For PP, downstream injection moulding load is relatively high, plastics weaving and BOPP start-up are in normal range, but affected by environmental protection and terminal demand, there is limited space for downstream start-up in the future.

From the terminal point of view, the demand for PP modification is concentrated in the automobile and household appliances industries. From January to August, the cumulative output of domestic automobiles was 15.939 million units, down 12.1% from the same period last year. The output of main household appliances was 38.0589 million units, up 5.0% from the same period last year.

In the second half of the year, although the decline of automobile production has narrowed, the negative growth trend is still difficult to change, and the growth rate of main household appliances production has continued to decline since May. In the current market environment, the terminal demand probability continues to weaken expectations in the fourth quarter.

Industry sales gross profit is at a high level

The report of listed companies shows that the unit production cost of Shenhua Baotou PE and PP is 5164 yuan and 5076 yuan respectively in the first half of this year. The unit sales cost of China Coal Energy PE and PP is 5619 yuan and 5440 yuan respectively. The gross profit of sales is maintained at the high level of 1470-2140 yuan/ton.

Horizontally, polyolefins are still very profitable in all chemical products. With the large-scale refining and chemical projects coming into operation, the supply and demand pattern of polyolefins is expected to be relaxed, and the profits of the industry will be passively compressed.

Operational strategy: Polypropylene can establish empty list step by step near 8200, target point around 7700 – 7900, stop loss point is set according to warehouse price. Risk hints: delayed commissioning of the plant, Saudi Arabian events, macro-policy impact beyond expectations.

Recently, Wang Zhanjie, Vice Chairman of China Plastic Processing Industry Association, shared the economic indicators of China’s plastic products industry from January to July 2019 in a series of activities entitled “China Plastic Industry Chain Summit Forum and the 30th Anniversary Celebration of China Plastic Processing Industry Association”.

According to reports, from January to July 2019, the cumulative output of plastic products enterprises in China totaled 53.2141 million tons, an increase of 7.22% compared with the same period last year.

The operating income of 15474 Enterprises above the scale was 105.37 billion yuan, an increase of 4.06% over the same period of last year.

The profit was 53.2 billion yuan, up 12.35% year-on-year, and the profit margin of business income was 5.05%.

The cumulative export volume of plastic products was 41.691 billion US dollars, an increase of 7.13% over the same period of last year.

Wang Zhanjie pointed out that the joint efforts of three million industrial workers in the industry have provided rich material resources and made due contributions to the development of relevant industries and the improvement of people’s living standards.