With the expansion of production capacity, the new plastic restriction order, and the worldwide public health events, 2020 will be a eventful year. All rubber and plastic industries, including polypropylene, have been hit. In 2020, the domestic polypropylene industry will forge ahead. It can not only stabilize the production and circulation of old strength models, but also rapidly develop melt blown PP to meet the needs of epidemic prevention at home and abroad. According to the monitoring of the business agency, the domestic polypropylene market in 2020 is commendable, and the annual growth rate of most brands of products is about 10%, and the overall performance is better than that in 2019. Accurate domestic epidemic prevention policy and stable terminal industry demand are the main advantages of domestic polypropylene growth in this year.
Cause analysis
In contrast to the red of the year-end answer sheet, domestic polypropylene has a lot of bad luck at the beginning of the year. In addition, the cloud of the epidemic situation was shrouded, and the opening tone was dignified. 2019 is the peak of PP production, and the annual capacity growth rate is the highest since 2010. However, the continued background of production expansion leads to fierce competition in the industry in the beginning of 2020, and a typical contradiction between supply and demand appears. In addition, the downstream demand is weak in the off-season, so the petrochemical plant maintains the strategy of reducing the reservoir. Due to the influence of the epidemic situation, enterprises all over the country have stopped production to varying degrees. As the global demand for crude oil shrinks, the trend of upstream propylene falling gradually highlights. Although the downstream isopropanol is one of the disinfectant raw materials, due to the impact of public health events, the recent price rise has a positive impact on propylene, but other downstream market drops greatly, which is detrimental to the cost of polypropylene. Even if the PP polymerization plant is a batch of plants that returned to work earlier, the absence of downstream aggravates the oversupply of PP. Business profit sales, PP market shocks all the way down.
With the development of epidemic prevention demand at home and abroad, the social demand for PP fiber material and melt blown material is rapidly rising. In particular, the gap of meltblown products is large, and the production proportion of copolymer injection plastics and drawing materials is reduced. In the whole year of 2019, the production capacity of PP drawing materials will account for about 33%. In April 2020, a large number of enterprises will switch production, which will cause the production capacity proportion of PP drawing materials to drop to around 22%. Short term production mismatch led to supply shortage, polypropylene market inflection point, the whole variety price was pushed up. It is worth mentioning that in the first and middle of April, a wave of “demon” speculation rose. Due to the huge demand for prevention and control materials at that time, the rapid increase of social demand in the short term caught the polypropylene enterprises and the society by surprise, and the petrochemical enterprises switched to the products in short supply one after another. The production of melt blown polypropylene has been greatly expanded. Even so, the gap of some brands of products is still large. During this period, the blind pursuit of Z30S, s2040 and other fiber materials to replace melt blown materials occurred, resulting in the corresponding model of products increased dramatically. Then the enterprise issued the statement to explain the use of fiber materials, and said that the products were used in special fields without any guarantee and responsibility, calling on customers to use the products correctly. After that, the abnormal speculation atmosphere gradually weakened, and it returned to the general law of supply and demand prices at the end of April.
During the period, the upstream propylene was affected by the upward trend of international crude oil price, and the market was positive. However, PP with stable upstream support performed generally in the middle of the year. On the one hand, it is necessary to recall the speculation of fiber PP in the early stage, on the other hand, the market also needs time to pay for the imbalance of production scheduling. At the same time, there was a hidden inventory to be digested, and the price of fiber material then entered the gradually callback market. Part of the spot market performance for “revenge” type of decline. The demand for masks was not so high, and the sentiment of waiting and waiting was heavy, and the actual trading atmosphere was relatively cold. PP market long and short tangled, temporarily lost market guidance. By August, many production lines were put into production. The typhoon led to a decrease in the arrival of PP cargo, diluting the impact of supply expansion on PP prices. At the same time, domestic total inventory decreased and futures rose, which led to the market at that time. The supply and demand in the market was relatively balanced, but the downstream price reduction intention was obvious at that time.
After two months of stable market in September and October, petrochemicals’ inventory increased rapidly in early November. Driven by the rise of futures, the market trading atmosphere turned warm in time, and the danger of accumulated stocks was successfully solved. At that time, the stock price of PP dropped to the low point in the middle of the year. At the same time, it also increases the downstream cost pressure represented by plastic knitting enterprises, reduces the profit space, and generally intensifies the resistance. In December, the downstream delivery of goods has shrunk, and some plastic knitting enterprises have plans to reduce production and reduce burden. There is resistance to the seller’s shipment, and the overall price is weak. Combined with the start-up of previously shut-down units, the late new units were actually put into operation. At present, the domestic polypropylene operating rate is high, and the supply is significantly increased, which is detrimental to the spot market.
Melt blown polypropylene
Melt blown PP: when it comes to this year’s melt blown polypropylene, everyone will never forget the urgent demand for it from epidemic prevention work at home and abroad in the first half of this year. At the same time, it is also the most important reason to push up the price of melt blown PP. At that time, the expansion of production had not yet started, and melt blown PP even had a brief chaos. Market prices skyrocketed, and one of the goods is difficult to find, orders placed for several months. The old melt blown PP enterprises have expanded their production rapidly, and many private enterprises have also transferred into production. The national team led the organization, and the shortage of products was gradually solved. In May, although the news of PP melt blown material market was complicated, the market had been mixed with many empty spaces and was under control on the whole. Even so, the average price of melt blown polypropylene of 1500 grade was still as high as 24000.00 yuan / ton. During this period, the rectification action of relevant domestic departments on melt blown fabric industry eliminated many unqualified products and low-quality production capacity. Some small and medium-sized enterprises invested in cross industry in the early stage left due to technical problems, resulting in weak demand in the downstream to a certain extent, which was detrimental to melt blown PP price. On the other hand, the state has lowered the access standard of masks and announced that it will allow the use of protective masks in accordance with the Chinese standard GB 2626 (protection level kn95), which is conducive to the export of meltblown fabrics.
Since then, the supply of melt blown PP gradually met the demand, and Sinopec’s enterprises successively sold meltblown materials and cloth, which had an impact on the market. The domestic market is oversupply, and the demand for epidemic prevention products is declining. The competition among the manufacturers of epidemic prevention products is strong. The profits of the main downstream mask factories in China are seriously diluted. By the fourth quarter of this year, the price of melt blown PP has dropped to 10000 yuan. As of December 17, the average quotation of pph-y1500 sample enterprises monitored by the business agency was 10900 yuan / ton. At present, the trend of the second outbreak of overseas epidemic is obvious, and many countries have announced the re closure of the city, and the non-woven fabrics in the application of medical protection are sought after again. However, from the point of view that the price of imported materials is also stable and weak, it is difficult for the price of melt blown materials to improve, and the overall trend may still be inclined to adjust.
Year end overview
PP business agency analysts believe: the positive market of polypropylene in 2020 will benefit from the stability of the domestic market environment. This year’s PP production capacity still shows the trend of expansion. Under the increasingly fierce competition of domestic polymerization plants, PP price can still have a certain increase, which is inseparable from the development of downstream. At the same time, the support of upstream propylene to PP cost is relatively strong in the whole year. The business club believes that the fundamentals of PP will be stable in 2020 and are ready to accept the market challenge in 2021.
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