May oversupply in the plastics market may be eased

First, the cost decline led to the decline of downstream plastic products, its main upstream products: butadiene (-20.14%), styrene (-2.00%), calcium carbide (-1.88%), naphtha (-1.82%) and other upstream products It is still generally dominated by the downward trend, which makes the downstream PS, ABS, PVC, PE and other products lose their cost support. Under the background of the contradiction between supply and demand, the downward trend has become inevitable.

In terms of supply, the output of primary form plastics in March 2017 was 7.520 million tons, an increase of 4.6% year-on-year. In April, the maintenance of factory equipment was not large. Most of the equipments were concentrated in the maintenance period in May and June, so it is estimated that they will be used in April. Plastic production is still high. In addition, the import volume also increased. In March, China imported 2.71 million tons of primary plastics, an increase of 11.06% year-on-year. Domestic production and imports were double high, resulting in high social inventories. The inventory data also confirmed the oversupply situation: For example, as of LLDPE, as of April 19, petrochemical inventories in East China, North China, South China and Central China were 65,000 tons, an increase of 10,400 tons from April 12, which was at a high level; social inventories were roughly 500,000 tons, which was extremely high. Level, this has produced a strong suppression of plastic prices, PE, PP, PVC and other product markets need a new round of destocking process.

Looking at the demand side, the output of plastic products in March 2017 was 6.71 million tons, a year-on-year increase of 3.3%. Although the downstream demand is also increasing, the increase is much lower than the output of plastic raw materials (11.06%). The data in April may continue to shrink, the operating rate of packaging film is 60%, and the operating rate of PVC profiles and pipes is generally lower than 50%.

In May, the contradiction of oversupply in the market will be alleviated. On the one hand, the maintenance of polyolefin equipment plans, most of the equipment maintenance period is concentrated from mid-May to early June, the market destocking process is expected to accelerate, the market does not prevent borrowing The possibility of machine speculation, but the demand side, the film, agricultural film, drawing season is over, the market is in the off-season, more importantly, the real estate-related pipes and profiles are difficult to pick up, the market price may be limited, it is expected in May It is difficult to see the market. The market may be difficult to rise and fall. The amplitude of the product will continue to narrow. PP and PE may rebound slightly, but the range is not expected to be large, within 3%.