Since the beginning of this year, despite the increase in macro-environmental uncertainty, although the chemical industry's prosperity has rebounded slightly, profits have declined compared with last year, and corporate profitability has declined. Yesterday, at the same event of the "2019 China Plastics Industry Conference" held in Hangzhou, the guests said that the polyolefin market is still not optimistic in the future due to the impact of raw materials and supply and demand.
In the first half of this year, the domestic plastics market oscillated downward. As of late June, the prices of LLDPE and LDPE fell to a low point in the past 10 years, and the prices of other varieties also fell to a low level in the past five years. “The performance of the domestic chemical market in the first half is so low, mainly due to the imbalance of supply and demand. High stocks are always the main factor plaguing the market, followed by more emergencies, domestic tax reductions, trade friction escalation, RMB exchange rate fluctuations, etc. Both have a great impact on the market." Xu Yan, deputy manager of the information department of PetroChina Huadong Chemical Sales Co., said at the meeting.
“High inventory is difficult to digest, mainly because the import volume has increased significantly year-on-year. The import and delivery cost is relatively low in January-April. Most of the goods have entered the factory in advance, occupying the market share of domestically produced goods. The import volume is the main reason for the slow storage of domestic petrochemical enterprises.” He said that relatively low prices and absolutely high inventory are the main contradictions in the market in the first half of the year.
For the later polyolefin market trend, some guests believe that the price volatility in the second half of the year may be less than the first half. The specific analysis, from June to August, centralized maintenance, the basic dust can be put into operation before September, the probability of price up-up is too large, and the fourth quarter is affected by the concentrated expansion of production capacity, and the price may fall again.
"In terms of domestic polyolefin supply, the future will grow rapidly from 'two barrels of oil' to the diversification of the world, and the concentration of domestic supply will decline significantly in the next three years." Xu Yan said that the trend of diversification of domestic supply is still continuing. At the end of this year, with the successive start of the second phase of Zhejiang Petrochemical, Hengli Petrochemical and some coal chemical enterprises, and the large number of ethane and propane dehydrogenation to olefins, the domestic polyolefin supply will enter the era of “competition”.
“From a geographical perspective, the East China PE market is still the largest net inflow market, followed by North China, with more new installations in South China, and a significant decline in net inflows. There are still about 15 million tons of gaps in China that need to be filled, but North America and the Middle East The pace of energy has not stopped. According to the annual import growth of 5%, it is estimated that the import volume will be 17 million tons in 2022. By then, the domestic surplus will be about 2 million tons. Because East China is the largest net inflow, all excess amount must be given priority. In the east, the market competition in East China will become hot, and the price may become a domestic and even global depression," he said.
In addition, the expansion capacity of domestic polypropylene plants is much larger than that of polyethylene, mainly because PDH devices are put into production in large quantities. The East China market basically balances production and demand, and the supply in the northwest will be excessive. Considering the irreplaceability of some imported products, it is expected that there will be a surplus of nearly 4 million tons of domestic polypropylene in 2022.
Compared with the upstream diversification, the concentration of downstream industries is increasing, and the transfer of the industrial chain is also accelerating, which has intensified competition in the domestic trade. “Although the types of plastic downstream products are scattered, the production capacity of most industries is absolutely surplus. The integration concentration of downstream factories has been a general trend. In recent years, we can see that this trend is accelerating.” The guests said that since the trade friction last year The upgrade, the speed of plastic enterprises' external migration has obviously accelerated, and the integration of small and medium-sized enterprises has accelerated, leading to the gradual concentration of orders to medium and large-scale factories.
In addition, the company's external migration will also lead to a gradual reduction in export orders. The decline in the number of small and medium-sized enterprises will inevitably lead to an increase in the intensity of competition in the trade sector, and the profitability of small and medium-sized traders is becoming increasingly difficult.
In the view of Chen Kai, a chemical researcher at the Yongan Futures Industry Development Headquarters, LLDPE's own rebound in the short-term is not strong, and may rebound due to macro changes and rebound of other varieties. In the medium and long term, the downward trend remains unchanged, and the reduction in short-term imports will support LLDPE, but it may not be enough to change direction. In terms of PP, the main contradiction in the second half of the year was the commissioning of new installations, and the overall downward trend remained unchanged. In the medium and long term, if the new installations are put into production on schedule, the 1909 contract may have accumulated inventory expectations; if the equipment is put into production less than expected, the inventory may be degraded, but it is difficult to reach the low level and the market will remain oscillating. "On this basis, investors can pay more attention to the opportunities of arbitrage, monthly arbitrage, and arbitrage between varieties," he said.
Xu Yan believes that the pattern of oversupply in the polyolefin market has been basically determined in the future. Under this background, the risk management needs of production enterprises are prominent. Industry chain enterprises should pay more attention to the application of futures and derivatives, and risk management of their own inventory. .