Propylene prices fell sharply in March and fluctuated more than expected. While the price of propylene has changed dramatically, the prices and profits of many downstream products are also constantly changing, and there are many consistencies and differences with propylene. Overall, the correlation between propylene and downstream products is still strong, and the supply and demand side is still the main factor affecting the propylene market in the later stage. The propylene market will be stabilized in the short term, and the price fluctuation space will be significantly reduced.
| PVA 0599 (PVA BF05) |
In March, the propylene market was very busy, with market prices falling sharply at first and then rising sharply. The mainstream price of propylene in Shandong Province dropped from 7600 yuan/ton in late February to 6400 yuan/ton, a drop of 15.8%, while the current price has risen to 7300 yuan/ton, an increase of 14.1%. Recently, the market has entered a stable period, and the mainstream price of propylene in Shandong has stabilized at 7200-7300 yuan/ton.
There are many downstream products of propylene, and there is a strong correlation between propylene and many downstream market changes. Propylene prices soared and plunged in March, so what is the downstream market trend?
In March, the downstream of propylene showed a high-opening and low-going trend, and the prices of most products have declined by different margins compared with the beginning of the month. The main reason is that on the one hand, the supply and demand of different products are different. On the other hand, the sharp change of raw material propylene price also leads to the continuous change of downstream product cost, which has a greater impact on the market trend.
From the point of view of specific products, only acrylonitrile prices in downstream products have increased since the beginning of the month, mainly supported by the overhaul of the outer disk and marine power plant. The prices of other downstream products have fallen, of which epichlorohydrin and acetone have fallen relatively large, mainly due to the contradiction between supply and demand.
It is difficult to see the correlation between propylene and downstream price changes. Compared with the downstream, propylene price changes frequently and quickly. In about half a month, propylene has experienced a sharp fall, a sharp rise and a stable price, while most downstream prices change relatively slowly.
From the monthly average, the average price of propylene in March was 7.84% lower than that in February, and the price center continued to move downward. Among the downstream products, the average price of acrylonitrile and octanol in March was higher than that in February, while the prices of other products declined by different ranges.
From the monthly average price comparison, it can reflect the correlation between the price changes of propylene and downstream products. Propylene price center of gravity declined, downstream product cost support weakened, price center of gravity also fell. Although sometimes downstream product price changes will lag behind, but the market remains consistent. However, downstream product prices fell less than propylene, which also reflects the weaker propylene market.
| PVA 0588 ( PVA BP05) |
Judging from the downstream profit situation, up to March, the downstream still maintains a large profit margin, and most downstream products’profits have risen by different margins compared with February.
As we mentioned above, the average price of most downstream products in March has declined by different margins compared with February, but the profit margin has increased. This shows that the main reason for the expansion of profit margin of downstream products lies in the large drop in cost, i.e. the large drop in the gravity center of propylene price, which is verified by the previous analysis. This indicates that the profit of propylene industry is transferred from propylene downstream in the near future, and the direction of transfer may change in the later period.
Outlook for the future
After a sharp decline and rise, the propylene market has stabilized in the near future, and the price center of gravity has returned to a relatively reasonable space. However, the recent market of some downstream products is relatively weak, and the price focus has continued to decline. This reflects the trend of price recovery between propylene and downstream, with some downstream profit margins narrowing expectations.
In the later stage, the supply and demand side is still the most important factor affecting propylene, which needs continuous and close attention. On the supply side, the spring overhaul season has been gradually opened, and some refineries in Shandong have entered the overhaul; on the outside side, some equipment in Japan, Korea and other places are also expected to be in stock for overhaul, and the supply of the outside will gradually decline. Reduced supply will boost the market mentality and substantially reduce the supply pressure of enterprises. On the demand side, downstream demand needs to continue to recover. The impact of the continued decline in polypropylene futures and spot prices on the stock and profit margins of the propylene market, and some downstream maintenance facilities need to be restored. Overall, propylene market pressure is expected to ease in the later period, but the range is limited. As far as the current situation is concerned, the mainstream price of propylene in Shandong Province is relatively reasonable between 7000-7500 yuan/ton. There will be no sharp rise or fall in the market in the short term, and stable consolidation will be the mainstream trend.
| PVA |